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Facts you should know before betting on it

Goal (TGT) was recently on Zacks.com’s list of most wanted stocks. Therefore, you may want to consider some of the key factors that could influence the stock’s performance in the near future.

Shares of this retailer have returned -0.2% over the past month, while the Zacks S&P 500 Composite has returned +0.7%. The Zacks Retail – Discount Stores industry, which includes Target, has lost 0.3% in the period. The crucial question now is: Where could the share develop in the short term?

Although media reports or rumors about a significant change in a company’s business prospects usually cause the stock to trend and result in an immediate price change, there are always certain fundamental factors that ultimately determine the buy-and-hold decision .

Here at Zacks, we emphasize evaluating the change in a company’s future earnings outlook over anything else. This is because we believe that the present value of future earnings streams determines the fair value of the company’s shares.

Our analysis is essentially based on how sell-side analysts covering the stock revise their earnings estimates to take into account the latest business trends. When a company’s earnings estimates rise, the fair value of its shares also rises. And when a stock’s fair value is higher than its current market price, investors tend to buy the stock, resulting in an increase in the stock price. Because of this, empirical studies suggest a strong correlation between trends in earnings estimate revisions and near-term stock movements.

Target is expected to report earnings of $2.28 per share for the current quarter, representing a year-over-year change of +8.6%. Over the past 30 days, the Zacks Consensus Estimate has moved +0.1%.

For the current fiscal year, the consensus earnings estimate of $9.54 suggests a year-over-year change of +6.7%. Over the past 30 days, this estimate has remained unchanged.

For the next fiscal year, the consensus earnings estimate of $10.56 represents a +10.8% change from what Target was expected to report a year ago. Last month, the estimate remained unchanged.

Our proprietary stock ranking tool, the Zacks Rank, has a strong, outside-audited track record of success and provides a more meaningful picture of a stock’s near-term price performance by effectively leveraging the power of earnings estimate revisions. Based on the magnitude of the recent consensus estimate change as well as three other factors related to earnings estimates, Zacks ranks Target at #2 (Buy).

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