Target (NYSE: TGT) is scheduled to release its fiscal first-quarter earnings on Wednesday, May 21, 2025, with analysts projecting earnings of $1.70 per share on $24.4 billion in revenue. This would represent a 16% year-over-year decline in earnings and a flat growth in sales compared to the prior year’s figures of $2.03 per share and $24.5 billion in revenue. Historically, TGT stock has increased 50% of the time following earnings announcements with a median one-day rise of 8.0% and a maximum observed increase of 18%.
The retailer is facing headwinds as it shifts its focus toward lower-margin essential goods, a move prompted by persistent inflation, elevated interest rates, tariff concerns, and heightened market competition. This strategic shift may exert pressure on financial performance in the upcoming quarter. Despite these challenges, the company remains operationally sound, with a current market capitalization of $44 billion. Over the past twelve months, it generated $107 billion in revenue, $5.6 billion in operating profit, and $4.1 billion in net income. Also see, Buy or Sell TGT?
For event-driven traders, historical patterns may offer an edge, whether by positioning ahead of earnings or reacting to post-release moves. That said, if you seek upside with lower volatility than from individual stocks, the Trefis High Quality portfolio presents an alternative, having outperformed the S&P 500 and generated returns exceeding 91% since its inception. See earnings reaction history of all stocks.
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Target’s Historical Odds Of Positive Post-Earnings Return
Some observations on one-day (1D) post-earnings returns:
- There are 20 earnings data points recorded over the last five years, with 10 positive and 10 negative one-day (1D) returns observed. In summary, positive 1D returns were seen about 50% of the time.
- The percentage remains the same at 50% if we consider data for the last 3 years instead of 5.
- Median of the 10 positive returns = 8.0%, and median of the 10 negative returns = -5.7%
Additional data for observed 5-Day (5D), and 21-Day (21D) returns post earnings are summarized along with the statistics in the table below.
Correlation Between 1D, 5D, and 21D Historical Returns
A relatively less risky strategy (though not useful if the correlation is low) is to understand the correlation between short-term and medium-term returns post earnings, find a pair that has the highest correlation, and execute the appropriate trade. For example, if 1D and 5D show the highest correlation, a trader can position themselves “long” for the next 5 days if 1D post-earnings return is positive. Here is some correlation data based on 5-year and 3-year (more recent) history. Note that the correlation 1D_5D refers to the correlation between 1D post-earnings returns and subsequent 5D returns.
TGT Correlation Between 1D, 5D and 21D Historical Returns
Is There Any Correlation With Peer Earnings?
Sometimes, peer performance can have influence on post-earnings stock reaction. In fact, the pricing-in might begin before the earnings are announced. Here is some historical data on the past post-earnings performance of Target stock compared with the stock performance of peers that reported earnings just before Target. For fair comparison, peer stock returns also represent post-earnings one-day (1D) returns.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
