Target (NYSE:TGT) and Wal-Mart (NYSE:WMT) both have had a difficult year and investors had been skeptical about both the retailers for most part of the year. The reason behind this is that the customers for both stores have had a tough economic climate and their incomes got affected alongside the general economy of the country. As a result both retailers suffered for many quarters.
However, lately the negative environment surrounding both companies has improved and there has been a rise in their stock prices. There earning results were better than the expectations and chances are that their 4th quarter results would be promising as well. Due to this change it might be the right time for income and growth investors to take the stocks of these to retailers into consideration.
Due to low earnings in many previous quarters, the expectations for this quarter were very low from both Target (NYSETGT) as well as Wal-Mart (NYSE:WMT). However the quarterly results calmed down all the negativity and showed that their businesses are ready to be picked up in the future quarters.
During the last quarter, Target (NYSE:TGT) made $0.54 per share which is a 2.9% decline from year to year numbers. Although the numbers seem bad but the expectations were even worse. Analyst had anticipated that Target (NYSE:TGT) would earn $0.47 per share. Therefore Target (NYSE:TGT) managed to beat the expected amount by 14%. What is important to note is the fact that this was first quarter in which the retailer revealed an increase in the comparable sales in America.
Wal-Mart (NYSE:WMT) on the other hand revealed earnings of $1.12 per share which met with the expectations of the analysts. The boost in the sales of both Target (NYSE:TGT) as well as Wal-Mart (NYSE:WMT) might be a result of the drop in the gas prices. The amount that people are saving in gas might be proving beneficial for both the retailers especially with the upcoming holiday season.
In the time period of a few months we have seen a fierce decline in the prices of oil and lower gas prices benefit the average consumers. This can be affirmed by looking at the U.S retail sales which went up 0.3% in the month of October.
The drop in the oil price has come at the right time since the holiday season is right around the corner. People want to shop for the holiday season and for Christmas and a few extra bucks in the pocket is just what they need at the time. Wal-Mart (NYSE:WMT) AND Target (NYSE:TGT) are both stores that tend to get busier during the holidays and therefore it is highly possible that both the companies will be able to exceed expectations of the analysts once again by the end of the quarter.
Wal-Mart’s (NYSE:WMT) successful chain of small stores is an added asset for the overall income of the company. Wal-Mart (NYSE:WMT) has access to urban areas via its Neighbourhood Market banner and this will definitely draw more income for the company.
The future earnings for both Wal-Mart (NYSE:WMT) and Target (NYSE:TGT) are likely to grow which will be beneficiary for the shareholders. Both retailers will benefit its respective shareholders through solid dividends. Target’s (NYSE:TGT) revenue is 3.1% and Wal-Mart’s (NYSE:WMT) revenue is 2.3%. This is the reason why income and growth investors should invest in Wal-Mart (NYSE:WMT) and Target (NYSE:TGT).