Here are three other important companies and stocks that I have my eye on.
Target (May 22)
Target's TGT stock is cheap and has a nice dividend, and the company has a demonstrated ability to create earnings growth in a retail industry that has been absolutely decimated by Amazon AMZN.
In the fourth quarter of 2018, Target reported comp sales growth of 5.3%. What I really like about Target's progress right now is how it is molding its growing digital presence in a way that complements its store base. Seventy five percent of all digital sales in the fourth quarter were fulfilled in a Target store, meaning e-commerce is aiding in bringing in more consumers to its locations. This trend is definitely a contributor to the fact that the company's traffic increased 4.5% in the fourth quarter, in my view.
Full-year all-time highs of $5.50 per diluted share on GAAP basis made a strong statement from Target, and I believe it is one of the names in contention within the new age or retail.
The Minneapolis-based retailer set the bar low for 2019 in terms of comp sales guidance, which I think was a good thing. By forecasting comp sales growth in the low-to mid-single digits, Target is opening itself to upside surprises.
Full-year earnings expectations are $5.75 to $6.05 per diluted share on a GAAP basis. That would mark continued year-over-year growth, and set the bar for new records. I will be watching intently to see if Target starts the year off on the right foot in terms of meeting those goals.
Foot Locker (May 24)
Foot Locker FL might not be a name you immediately think of on the stock market, but the company is actually doing very well lately.
The company and its stock were on a tear, but a big hit to fiscal year 2018 net income caused a strong decline. Finishing fiscal 2019 with a sharp increase in net income of over 90%, the shares seem to be back on track despite the weariness of the markets right now.
Analyst estimates have Foot Locker posting earnings of around $5.18 per share for the full year 2020. That would have the stock currently trading at around 10.7x forward full-year results. It would also mark a strong increase over fiscal 2019's $4.66 per share, and I think Foot Locker might just be a nice name to play this week.
Foot Locker finished fiscal 2019 with over $800 million in cash/equivalents, and has a great balance sheet. This week I'll be looking to see any commentary on comp sales and traffic.
Hibbett Sports (May 24)
Hibbett Sports HIBB has spent the last few years maintaining revenues at the cost of overall net income. The sports retailer has drastically increased its SG&A expenses over the last five years and earnings have suffered. Reporting a five-year high in fiscal 2019 of $1.01 billion in revenues, Hibbett Sports had a contrasting 19% decrease in net income to $28.42 million vs. the 4.1% increase in revenues. The retailer has suffered declining net income year after year, and it's becoming a concern.
Fiscal 2020 guidance is for full year earnings of $1.50-$1.70. Hibbett noted that these earnings include onetime costs associated with store closures and the integration of City Gear. On a non-GAAP basis, Hibbett forecasted earnings of $1.80 to $2.00 per diluted share. On a GAAP basis, earnings have the potential to be slightly better than last year's $1.51 per share.
Of course, the expected stable earnings have more to do with the decreasing share count, rather than actual net income improvements.
The stock's performance has demonstrated the unimpressive nature of the company's financials over the last few years, and it will likely take a nice surprise in order for HIBB to find any sort of meaningful strength.