Walmart vs Target: How did Walmart and Target perform in the September 2022 quarter? Check out analysts' view

Target and Walmart reported their September quarter earnings. Target reported its September quarter earnings earlier this week. Target missed the estimates, and the Target stock closed 13.06% lower at $155.47 per share on Wednesday. Target share price have fallen by around 30% in 2022.

 Target Quarterly Results 2022 highlights:

Target Q3 Results 2022 in detail:

Target Q3 2022 Revenue: Total revenue for Sep quarter stood at $26.5 billion, which grew 3.4% compared with last year, reflecting total sales growth of 3.3% and a 9.5% increase in other revenue. Revenue slowed down as consumers made a trade-offs between what they need and what they want – a potential warning sign for the holiday shopping season amid rising prices.

Target Q3 earnings 2022: Target posted earnings of $712 million, down 49.3% on-year, below street estimate as sales growth slowed down and as the company cleared through unwanted inventory.

Target Quarterly results Operating income: Operating income for the third quarter stood at $1 billion, which was down 49.2% from $2 billion in the year-ago period. The fall in the operating income was primarily driven by a decline in the company's gross margin rate.

Target Q3 Margins: The operating income margin rate stood at 3.9% from 7.8% in the year-ago period. The gross margin rate was at 24.7% in the September quarter. In the same quarter last year, it was 28%. The gross margin rate was pressured by increased compensation and headcount in distribution centers and the costs of managing early receipts of inventory, with a slight offset from a favorable category mix.

Target Quarterly report Other updates: The company said that the inventory increased 14.4% year on year, and it has cooled from the previous quarter's growth rate of 36%. The company has also announced a $2 billion to $3 billion cost-cutting initiative.

Target Q3 results Few Positives: Target gained market share across all five of its key merchandise categories. It also had record sales volumes for back to school, back to college and Halloween. Comparable sales, which track Target sales online and at stores open at least 13 months, rose 2.7% beating street estimates.

Target Q4 Guidance: Based on softening sales and profit trends that emerged late in the third quarter and persisted into November. Now, the company believes it is prudent to plan for a wide range of sales outcomes in the next quarter, centered around a low-single-digit decline in comparable sales, consistent with those recent trends.

Target Q3 2022 Dividend: Target paid dividends of $497 million in the September quarter, compared with $440 million last year, reflecting a 20% increase in the dividend per share, partially offset by a decline in average share count.

Target quarterly results analysts' view:

Based on Wall Street analysts' targets for Target, the average price target is $190.71, with a high estimate of $223 and a low forecast of $161.

Earlier this month, Jefferies upgraded Target shares' target price to $185 from the earlier target of $170 per share. The reason cited by the brokerage firm for the higher target was - supply chain improvements, attractive valuation, and inventory positioning.

Cowen analysts said that they see an advantage in Target based on valuation. The analysts believe leveling gas prices, consumer focus on value and grocery, and improved grocery margins can drive the upside. However, they remain cautious about softening online trends and inflation-yielding consumer trade down.

Walmart September Quarterly Results:

Walmart reported its Q3 results earning in the week and it was above expectation. Walmart raised its full-year guidance and announced a $20 billion share buyback. Walmart stock closed 6.5% higher on Tuesday post earnings. Walmart share price is up 4% in 2022. 

Walmart Q3 2022 results in detail:

Walmart Q3 Revenue: The company reported a revenue of $152.8 billion for Q3FY23, a jump of 8.7% from the year-ago period when it reported revenue of $140.5 billion. It delivered strong revenue growth globally with strength in Walmart US, Sam's Club US, Flipkart, and Walmex.

Walmart quarterly results Sales number: Walmart's US sales grew at 8.2% and 17.4% on a two-year stack. eCommerce growth was 16% compared to last year as the company continued to gain market share in grocery. Sam's Club comp sales increased 10% and 23.9% on a two-year stack. Membership income for the company increased by 8% as the member count increased to an all-time high. Walmart International's net sales were $25.3 billion, an increase of $1.7 billion, or 7.1%. It was negatively affected by $1.5 billion from currency fluctuations.

Walmart Q3 earnings 2022: Walmart posted a net loss of $1.8 billion, or 66 cents per share, down from a profit of $3.11 billion, or $1.11 per share, a year earlier as it recorded a charge of nearly $3.33 billion, or $1.05 a share, as part of opioid-related legal charges.

Walmart Q3 results Operating income: For the September quarter, the operating income reported by the company was $2.7 billion, a decline of 53.5%. Adjusted operating income was $6 billion, a growth of 3.9%. 

Consolidated operating expenses as a percentage of net sales increased by 144 basis points. Adjusted operating expenses as a percentage of net sales decreased by 75 basis points due to lower Covid-related costs and strong sales growth.

Walmart Q3 2022 Share Buyback: The company approved a new $20 billion share repurchase authorization replacing its existing authorization which had approximately $1.9 billion remaining at the end of the September quarter.

Guidance for 2023: Consolidated net sales growth of about 5.5%. Adjusted earnings per share declined from 6.0% to 7.0%, and consolidated adjusted operating income declined from 6.5% to 7.5%.

Walmart quarterly results analysts' view:

Analysts offering price forecasts for Walmart have a median target of $160, with a high estimate of $175 and a low estimate of $132 per share. 

Jefferies reiterated a BUY rating on Walmart and raised the price target to $165 per share from an earlier target of $161. The company is seen as a value leader and an outsized trade-down beneficiary. The firm believes Walmart is well-positioned in the present environment, particularly given the benefit they estimate could realize as a result of higher-income customers trading down.