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Target (TGT – Free Report) announced on Thursday that it would hire 20% more seasonal workers during the upcoming holiday shopping period, with a significant amount spent on order fulfillment online. Target, with Walmart (WMT – Free Report) and other retail powers had a strong second quarter. Now, the stock of TGT seems to have to be bought before what could be a great holiday shopping season.
Holiday Shopping
Target said it plans to hire 120,000 seasonal workers over the holiday season, a 20 percent jump from last year. The Minneapolis-based retailer expects to double the number of vacation employees who work on the fulfillment of online orders.
The company said it needed to add workers to continue expanding its "order picking" and "ramp-up" services, with a greater focus on storage capacity from the store. vacation vacations to help fulfill digital orders, as well as 7,500 seasonal employees should be added to distribution and distribution centers.
Target's plan follows Macy's (#M – Free Report) Wednesday announces that it hopes to attract 80,000 seasonal workers, which corresponds to its goal for 2017. The Kohl's department store (KSS – Free Report) launched its holiday "sooner than ever" in July.
There's still not much solid estimates on holiday shopping in 2018, but last year the National Retail Federation said retail sales in November and December had jumped from 5.5% to 691.9 billion dollars. At the same time, online sales and non-store sales jumped 11.5% to $ 138.4 billion.
Overview
Now that we've looked quickly at some of Target's holiday plans, let's see why TGT's stock might be worth buying while Target looks set to grow solidly.
Target saw its comparable sales increase 6.5% in the last quarter, marking its strongest quarterly performance since 2005 in this extremely important sales category. In addition, Target's digital compilations grew 41 percent, up 32 percent from the same period last year, and traffic grew 6.4 percent. Target's performance, along with other retailers, including Costco (COST – Free Report) and Walmart helped show that traditional retail can adapt to the Amazon era (AMZN – Free report).
Over the past year, Target has redesigned stores, opened smaller sites in urban areas and university campuses, and improved its pricing strategy. The company has also reorganized its digital strategy and supply chain. In addition, Target introduced the same day delivery to more than 700 sites – made possible by the acquisition of Shipt, a grocery delivery company – and launched the online order and collection selective in hundreds of stores.
Price movement and evaluation
Target's shares have increased by only 38% over the last five years, which is behind the 75% increase in the S & P 500 and the 120% increase in its sector. However, over the past 12 months, TGT's shares have climbed nearly 50%, surpassing 35% of its sector and crushing the 16% of S & P. Investors should also note that Target shares have jumped more than 14% in the last three months and are currently just below their peak of $ 90.39 per 52-week share.
In addition, Target's shares are currently trading at 16 times the 12-month EPS for Zacks Consensus, which is a discount to the industry average of 28.4X and the S & P 17.4X. TGT traded as low as 12.3 times last year with a median of one year of 14.2 times. But Target's shares are currently trading below its 52-week high at 17X. In addition, we can see that the valuation chart of TGT is hardly extended compared to the last five years.
Perspective
In the longer term, Target expects revenue growth comparable to that of the first half (4.8%) for the third quarter and the second half. Our estimate Zacks Consensus predicts that Target's annual revenue is expected to grow 4.5% to $ 75.13 billion. On the net result, Target's adjusted third quarter results are expected to increase 20.9% to $ 1.10 per share, while the results for fiscal 2018 are expected to increase by 14%.
Target has also recently experienced an upward revision of earnings estimates for fiscal years 2018 and 2019, which allows it to earn a # 2 Zacks rank (Buy). Target also posts "A" ratings for value and growth in our style score system and it looks like it may be worthwhile to buy before the start of the holiday shopping season.
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