Computed from published fixed rules, not a model's judgement — though one input, the count of high-severity risks, comes from the AI analysis below.
Not investment advice and not a price target: it scores the quarter's fundamentals, not the stock. Full methodology →
AI Takeaway
Target's fiscal 2026 second quarter was defined by $994 million in tariff refunds, which management recognized as a reduction of cost of sales and which significantly boosted reported profitability. Comparable sales rose 3.8%, with higher traffic and new stores contributing to the top line, while non-merchandise sales also grew. Excluding the tariff refund benefit, operating income growth was approximately 19%, revealing more moderate underlying momentum alongside a higher SG&A expense rate and minimal share repurchases.
Revenue
$26.54B
+5.27% YoY
EPS (Diluted)
$4.11
+100.49% YoY
Operating Income
$2.56B
+94.38% YoY
Source: SEC XBRL
Target (TGT) reported Q2 FY2026 revenue of $26.54B, up 5.3% year over year. Operating margin was 9.6%, up 4.4 points from 5.2% a year earlier. TGT's fiscal Q2 FY2026 corresponds to calendar Q3 2026.
Last 4 quarters: 4 beats
| Quarter | Actual EPS (USD) | Consensus (USD) | Result |
|---|---|---|---|
| Sep 2026 | 2.46 | 2.35 | Beat +4.5% |
| Jun 2026 | 1.71 | 1.48 | Beat +15.8% |
| Mar 2026 | 2.44 | 2.18 | Beat +12.1% |
| Dec 2025 | 1.78 | 1.74 | Beat +2.6% |
Compiled by AI from 10-Q Item 2 of this filing
Target recognized $994 million in IEEPA tariff refunds as a reduction of Cost of Sales in Q2 FY2026, which added 3.7 percentage points to gross margin and 1.9 percentage points to operating margin for the quarter.
Source: 10-Q Item 2 MD&A
Comparable sales rose 3.8%, reflecting a 3.6% increase in traffic and a 0.2% increase in average transaction amount; digitally originated comparable sales grew 8.7% versus 2.7% for stores.
Source: 10-Q Item 2 MD&A
Non-merchandise sales grew 20.1%, primarily driven by growth in the Roundel digital advertising business, contributing to overall net sales growth.
Source: 10-Q Item 2 MD&A
SG&A expense rate increased to 21.6% from 21.3% in Q2, reflecting higher compensation, new store and remodel-related expenses, partially offset by sales leverage.
Source: 10-Q Item 2 MD&A
Trailing twelve-month after-tax ROIC improved to 15.4% from 14.3%, including a 2.4 percentage point benefit from tariff refunds and a 0.6 percentage point drag from business transformation costs.
Source: 10-Q Item 2 MD&A
Compiled by AI from this SEC filing · 1 high, 2 medium, 2 low
Q2 FY2026 operating income includes $994 million from IEEPA tariff refunds recognized as a reduction of Cost of Sales. Excluding this benefit, operating income growth would have been approximately 19% rather than the reported 94.4%, indicating material earnings dependency on a non-recurring item.
Source: 10-Q Income Statement (XBRL)
Target's current ratio was 0.99 as of August 1, 2026, with current assets of $20.93B versus current liabilities of $21.18B. This leaves limited liquidity cushion for unexpected short-term obligations or supplier payment demands.
Source: 10-Q Balance Sheet (XBRL)
SG&A expenses rose 6.8% to $5.73B, faster than the 5.3% revenue growth, lifting the SG&A expense rate to 21.6% from 21.3%. Continued cost inflation in payroll, new stores, and remodel expenses could compress margins absent tariff refunds.
Source: 10-Q Income Statement (XBRL)
Investing cash outflow increased 29.4% to $2.40B year-to-date, driven by higher capital expenditures. Elevated capex could reduce free cash flow and financial flexibility if operating cash flow weakens.
Source: 10-Q Cash Flow Statement (XBRL)
Financing activities used $2.20B year-to-date, up 137.5% from the prior year, with share repurchases falling 98.8% to $3M. This reflects debt repayment and dividend commitments, potentially limiting capital available for growth investments or future buybacks.
Source: 10-Q Cash Flow Statement (XBRL)
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue $B | 26.54 $B | 25.21 $B | +5.27% |
Cost of Revenue $B | 17.60 $B | 17.90 $B | -1.68% |
Operating Income $B | 2.56 $B | 1.32 $B | +94.38% |
Net Income $B | 1.88 $B | 0.94 $B | +100.75% |
EPS (Basic) $ | 4.13 $ | 2.06 $ | +100.49% |
EPS (Diluted) $ | 4.11 $ | 2.05 $ | +100.49% |
SG&A Expense $B | 5.73 $B | 5.36 $B | +6.83% |
Answers draw on this SEC filing and the data on this page
Target reported Q1 FY2026 net sales growth of 6.7% to $25.4B, but GAAP diluted EPS fell 24.7% to $1.71 because the prior-year period included $593M of pretax interchange-fee settlement gains, while adjusted EPS rose 31.6%. Source: 10-Q Item 2 MD&A, pp.14, 19-20
Target Corporation reported a challenging FY2025, with revenue declining 1.7% to $104.8B and net income falling 9.4% to $3.7B, reflecting persistent pressure on consumer discretionary spending and margin compression.
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