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Tag: XLY

  • Target stock swings to a gain after earnings beat was offset by a downbeat near-term outlook

    Target stock swings to a gain after earnings beat was offset by a downbeat near-term outlook

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    Shares of Target Corp. seesawed to a gain early Wednesday, after the discount retailer reported fiscal first-quarter results that beat expectations and reiterated its full-year outlook, but provided a downbeat second-quarter profit view due to “softening sales trends.”

    Net income for the quarter to April 29 fell to $950 million, or $2.05 a share, from $1.01 billion, or $2.16 a share, in the same period a year ago. Excluding nonrecurring items, adjusted earnings per share fell to $2.05 from $2.19 but beat the FactSet consensus of $1.77.

    Total revenue increased 0.6% to $25.32 billion, above the FactSet consensus of $25.26 billion, while same-store sales grew 0.7% to exceed the FactSet consensus for a 0.2% rise, as traffic rose 0.9%.

    The stock rose 0.9% in premarket trading, but has swung from a loss of as much as 3.6% to a gain of as much as 2.4% after the results were reported.

    “We came into the year clear-eyed about the challenges consumers are facing, and we were determined to build on the trust we’ve established with our guests,” said Chief Executive Officer Brian Cornell. “It’s required agility and the ability to flex across our multi-category portfolio as we lean into value and the product categories our guests need most right now.”

    Cost of sales declined 0.4% to $18.39 billion, as gross margin improved to 27.4% from 26.7%.

    The value of inventory fell 6.5% from the sequential fourth quarter, and dropped 16.4% from a year ago, to $12.62 billion as of April 29.

    “[W]e now expect shrink will reduce this year’s profitability by more than $500 million compared with last year,” said CEO Cornell. “While there are many potential sources of inventory shrink, theft and organized retail crime are increasingly important drivers of the issue.

    Looking ahead, Target said it was planning for a wide range of sales outcomes, given “softening sales trends” in the first quarter.

    For the second quarter, the company expects same-store sales to be down in the low-single digit percentage range, compared with the FactSet consensus for a 0.1% increase. And adjusted EPS for the current quarter is expected to be $1.30 to $1.70, below expectations of $1.95.

    For the full year, Target reiterated its guidance for same-store sales growth of 0.7% and for adjusted EPS of $7.75 to $8.75. That compares with the FactSet consensus for same-store sales growth of 0.6% and for adjusted EPS of $8.36.

    The stock has gained 5.3% year to date through Tuesday, while the Consumer Discretionary Select Sector SPDR exchange-traded fund
    XLY,
    -0.41%
    has run up 14.1% and the S&P 500 index
    SPX,
    -0.64%
    has advanced 7.0%.

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  • 4 signs stocks are headed for a punishing selloff, as even strong performers look vulnerable

    4 signs stocks are headed for a punishing selloff, as even strong performers look vulnerable

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    U.S. stocks just touched their highest levels in two months. Yet, signs of a looming selloff are piling up, according to Jonathan Krinsky, chief technical strategist at BTIG.

    The S&P 500
    SPX,
    +0.33%
    and Russell 3000
    RUA,
    +0.40%
    are both trading just shy of their highs from mid-February, but market breadth hasn’t recovered, as index gains over the past month have largely relied on megacap names like Microsoft Corp.
    MSFT,
    +0.93%
    and Apple Inc.
    AAPL,
    +0.01%
    helping to offset weakness in other areas of the market.

    As of Friday, only 45% of Russell 3000 stocks were trading above their 200-day moving averages, according to data cited by Krinsky. By comparison, when the broad-market gauge was trading at its highest level of 2023 back in February, 70% of the individual stocks included in the index were trading above their 200-day moving average. Technical analysts use moving averages as a gauge of a stock or index’s momentum.


    BTIG

    Lackluster breath is looking like more of an issue analysts say, especially now that the Nasdaq’s outperformance appears to be fading after leading markets higher since the start of the year.

    Over the last two weeks, the Dow Jones Industrial Average
    DJIA,
    +0.30%
    has outperformed the Nasdaq Composite
    COMP,
    +0.28%
    by the widest margin since the two-week period ending Dec 30, according to FactSet data.

    Krinsky cited exchange-traded funds that feature megacap technology names, including the iShares Expanded Tech-Software ETF
    IGV,
    +0.45%    ,
    the Communications Services Select Sector SPDR Fund ETF
    XLC,
    -0.57%
    and Consumer Discretionary Select Sector SPDR Fund ETF
    XLY,
    +0.71%    ,
    as examples of emerging weakness in this critical sector of the market. Meanwhile, regional bank stocks, small-cap stocks and shares of retailers, all of which have lagged behind the market this year, look weak.

    See: Are tech stocks becoming a haven again? ‘It is a mistake,’ say market analysts.

    Krinsky summed up this dynamic thus: “The weak parts of the market remain weak, while the strong parts now appear vulnerable,” the BTIG analyst said in a Sunday note to clients.

    Furthermore, “[i]n absolute and relative terms, the tech sector looks like a poor risk/reward to us here,” Krinsky added.

    Low implied volatility is another issue for markets, Krinsky said. That can mean investors have gotten too complacent and markets may be heading for a selloff, analysts say.

    The Cboe Volatility Index
    VIX,
    -0.41%    ,
    otherwise known as Wall Street’s “fear gauge,” finished Friday at its lowest end-of-day level since Jan. 4, according to Dow Jones Market Data. The Cboe S&P 500 9-Day Volatility Index, which tracks implied volatility over a shorter time horizon, has also fallen to January lows, FactSet data show.

    Such low levels mean volatility could be poised to “mean revert,” Krinsky said, which may portend a selloff in the months ahead for the S&P 500, the most liquid and most closely watched gauge of U.S. stock-market performance.

    Implied volatility gauges measure activity in option contracts linked to the S&P 500 to gauge how volatile traders expect markets to be over the coming days and weeks. Typically, implied volatility advances when U.S. stocks are falling.

    The greenback has shown some signs of life in recent sessions, although the U.S. dollar remains well below the multi decade highs it reached back in September. That the buck bounced off its February lows late last week suggests that momentum could be skewed toward the upside for the dollar, Krinsky said, which could create more problems for stocks given the dollar’s tendency to weigh on markets during 2022.

    The ICE U.S. Dollar Index
    DXY,
    -0.43%    ,
    a gauge of the dollar’s strength measured against a basket of rivals, was up 0.7% in recent trade at 102.22.

    All of these factors support the notion that stocks could be headed for what Krinsky called the “reverse October playbook.”


    BTIG

    Just as the S&P 500 bottomed following the hotter-than-expected September report on consumer-price inflation, the market’s monthslong rebound rally may have peaked following last week’s CPI report for March, which showed consumer prices rose a scant 0.1% last month, less than the 0.2% increase that had been forecast by economists polled by MarketWatch.

    Not everybody agrees with this assessment. Marko Papic, chief strategist at Clocktower Group, cited market data going back to 1934 to show that U.S. stocks tend to rally after inflation peaks. Consumer-price inflation reached its highest level in more than four decades when the CPI headline number showed prices up 9.1% year-over-year in June.


    CLOCKTOWER GROUP

    U.S. stocks look set to decline for a second day in a row on Monday, with the S&P 500 off 0.3% at 4,126, while the Nasdaq Composite was down by 0.4% at 12,070, and the Dow Jones Industrial Average traded marginally lower at 33,881.

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  • Target stock tumbles 14% after big profit miss, downbeat same-store sales outlook

    Target stock tumbles 14% after big profit miss, downbeat same-store sales outlook

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    Shares of Target Corp.
    TGT,
    +3.95%
    tumbled 14.0% in premarket trading Wednesday, after the discount broadline retailer reported fiscal third-quarter profit that was well below expectations even as revenue beat, and provided a downbeat same-store sales outlook for the current quarter. Net income for the quarter to Oct. 29 fell to $712 million, or $1.54 a share, from $1.49 billion, or 3.04 a share, in the year-ago period. Excluding nonrecurring items, adjusted earnings per share of $1.54 missed the FactSet consensus of $2.16. “In the latter weeks of the quarter, sales and profit trends softened meaningfully, with guests’ shopping behavior increasingly impacted by inflation, rising interest rates and economic uncertainty,” said Chief Executive Brian Cornell. “This resulted in a third quarter profit performance well below our expectations.” Total revenue grew 3.4% to $26.52 billion, above the FactSet consensus of $26.41 billion, while same-store sales growth of 2.7% beat expectations for a 2.2% rise. Cost of sales increased more than total sales, rising 8.1% to $19.68 billion, as gross margin contracted to 25.8% from 29.0%. Inventory was up 14.4% from a year ago at $17.12 billion as of Oct. 31, compared with the 36.1% year-over-year increase as of July 30. For the fourth quarter, the company expects same-store sales to be down in the low-single digit percentage range, compared with the FactSet consensus for a 3.1% rise. Target’s stock has slipped 0.7% over the past three months through Tuesday, while the SPDR Consumer Discretionary Select Sector ETF
    XLY,
    +1.37%
    has dropped 16.3% and the S&P 500
    SPX,
    +0.87%
    has declined 7.3%.

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