One of the largest discount stores in the world, Target $TGT just reported earnings. It wasn't good...
Yesterday, we told you this report was front and center for our retail analyst, Jeff Macke. It wasn't so much about being interested in buying or selling the stock as it was about the information they provided.
And they gave the market a ton of information, very little of which was positive.
The company reported a 3.1% decrease in sales year-over-year, and its profit margin fell to 4.7% from 5.8% in the previous year.
In addition, they issued softer-than-expected guidance. This added fuel to the fire.
Overall, the market hated this report, which doesn't bode well for the broader retail space.
We have a lot to unpack today, so let's talk about what else happened 👇
Here are the latest earnings reactions from the S&P 500:
*click the image to enlarge it
As you can see, Autozone $AZO had the best reaction score on Friday, and Best Buy $BBY had the worst.
The stock with the largest market capitalization was Target $TGT, and the smallest was Best Buy.
TGT and BBY were punished for reporting double beats. The reactions were nasty!
Now, let's dig into the data and talk about the most significant earnings reactions 👇
TGT is consistently being punished for reporting earnings:
Target reported a double beat but was punished for it. The price fell 3%, with a muted reaction score of 0.35.
The stock has flipped the 61.8% retracement of the prior bull run from 2019-2021 from support into resistance. This suggests further downside is coming.
If TGT is below 139, the path of least resistance is lower for the foreseeable future.
BBY had its worst earnings reaction since Q4 2011:
Best Buy reported a double beat but was crushed. The price fell 13.30%, with a reaction score of -5.63.
The company reported a 5.2% decrease in its top line and a significantly higher tax rate than usual. They paid Uncle Sam 47.2% compared to the prior year's 21.2%.
In addition, they didn't provide any color on how tariffs will affect it, which is expected to be significant. The market hates this uncertainty.
The stock gapped below a key shelf of former lows, which we expect to turn into resistance.
If BBY is below 81, the path of least resistance is lower for the foreseeable future.
