Target & 3 Retail Stocks Poised for an Earnings Beat This Season

Against this backdrop, investor attention is likely to center on retailers with high earnings-beat probability and resilient business models. We have identified four stocks — Target Corporation TGT, Costco Wholesale Corporation COST, Dollar General Corporation DG and Ross Stores, Inc. ROST — that appear well-positioned to surpass earnings expectations this season.

Key Factors Likely to Have Influenced Retail Earnings

The retail earnings season is likely to reflect a consumer environment that remained resilient, but selective. We note that retail and food-services sales for May and June increased 7.3% and 6.7% year over year, suggesting that underlying demand provided a meaningful top-line tailwind. The FIFA World Cup, which began in June, may also have provided incremental support to categories such as sporting goods, athletic apparel and consumer electronics. As a result, retailers with strong digital platforms, attractive value propositions and exposure to discretionary categories benefiting from event-related demand may have delivered healthier comparable-sales growth.

The consumer backdrop, however, was far from uniformly favorable. Persistent price pressures continued to influence purchasing decisions, particularly among lower- and middle-income households, encouraging trade-down behavior and greater scrutiny of nonessential purchases. This environment is likely to have favored value-oriented retailers, while companies relying on lower-income consumers for larger discretionary purchases may have faced softer demand.

Retailers entered the period facing an unsettled cost environment in which tariffs, freight, sourcing expenses and geopolitical disruptions complicated merchandise planning. Companies with sufficient scale, diversified supply chains, private-label penetration and vendor negotiating leverage were likely better positioned to offset higher product costs. Players that passed increases directly to customers risked weakening unit demand, while those that absorbed them potentially sacrificed margins. Lower energy prices toward the end of the quarter may have provided some relief, but elevated transportation, labor and other operating expenses remained concerns.

Inventory management and operational efficiency are also expected to have emerged as major differentiators. Investments in automation, AI-enabled demand forecasting, merchandising optimization and logistics efficiency may have provided incremental support to operating margins. Retailers leveraging data analytics and supply-chain technology are likely to have benefited from improved inventory turns and lower fulfillment costs. Companies with robust loyalty ecosystems, membership programs and integrated physical-digital capabilities may have continued to gain market share.

4 Retail Stocks Poised for Earnings Surprises

Our research shows that for stocks with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), the chance of a positive earnings surprise is as high as 70%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Target: Zacks Rank #2 + Earnings ESP of +5.09%

Target’s improving operating momentum, broad-based strength across merchandise categories and channels, and differentiated mix of style, design, convenience and value reinforce the appeal of its retail franchise. The company is sharpening its merchandising authority while investing in store experience, technology and supply-chain capabilities, with encouraging consumer response to assortment innovation across food, wellness, beauty and other priority categories. Meanwhile, growing digital capabilities, same-day fulfillment and high-margin businesses such as Roundel, Target Plus and membership offerings provide additional avenues to deepen engagement and improve the earnings mix.

Target has a Zacks Rank #2 and an Earnings ESP of +5.09%. The Zacks Consensus Estimate for second-quarter fiscal 2026 earnings per share jumped 4 cents to $2.25 over the past seven days, calling for an increase of 9.8% year over year. The consensus estimate for revenues stands at $26.06 billion, which indicates an increase of 3.4% from the year-ago period. TGT has a trailing four-quarter earnings surprise of 8.2%, on average. The company will report numbers on Aug. 19, before the opening bell. 

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Costco: Zacks Rank #3 + Earnings ESP of +1.45%

Costco’s compelling value proposition, strong member loyalty and continued momentum across core merchandising, pharmacy, e-commerce and Kirkland Signature reinforce the strength of its differentiated membership model. The company is investing in warehouse expansion and digital capabilities while improving convenience through faster checkout, same-day delivery and a more seamless omnichannel experience. Costco is also advancing personalization, AI-enabled product discovery and retail media, creating additional opportunities to deepen member engagement and support growth. With its pricing authority, trusted brand and significant runway for domestic and international expansion, Costco remains well-positioned for sustained long-term success. 

Costco has a Zacks Rank #3 and an Earnings ESP of +1.45%. The Zacks Consensus Estimate for fourth-quarter fiscal 2026 earnings per share has been stable at $6.51 over the past 30 days, implying an increase of 10.9% from the year-ago period. The consensus estimate for revenues stands at $94.46 billion, which indicates a year-over-year rise of 9.6%. COST has a trailing four-quarter earnings surprise of 1%, on average. The company will report numbers on Sept. 24, after the market closes. 

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Dollar General: Zacks Rank #3 + Earnings ESP of +1.61%

Dollar General’s compelling value proposition, broad store network and growing appeal across income groups continue to strengthen its competitive position, particularly as consumers prioritize affordability and convenience. The company is building on this foundation through stronger nonconsumables merchandising, store renovations, expanding delivery capabilities and digital initiatives designed to deepen customer engagement and loyalty. At the same time, progress in shrink reduction, inventory optimization, supply-chain productivity and category management is supporting better operating efficiency and margin prospects.

Dollar General has a Zacks Rank #3 and an Earnings ESP of +1.61%. The Zacks Consensus Estimate for second-quarter fiscal 2026 earnings per share has been stable at $2.00 over the past 30 days, implying an increase of 7.5% from the year-ago period. The consensus estimate for revenues stands at $11.17 billion, which indicates a year-over-year rise of 4.2%. DG has a trailing four-quarter earnings surprise of 21%, on average. The company will report numbers on Aug. 27, before the market opens. 

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Ross Stores: Zacks Rank #3 + Earnings ESP of +4.03%

Ross Stores is strengthening its competitive position through disciplined execution, compelling branded assortments and a customer-focused transformation strategy that is driving broad-based traffic growth and market share gains. The company continues to enhance its merchandising, marketing and store experience while expanding its footprint and leveraging strong vendor relationships to secure attractive off-price merchandise. Management also sees significant runway from new customer acquisition, particularly among younger shoppers, supported by modernized branding, targeted marketing and ongoing operational improvements.

Ross Stores has a Zacks Rank #3 and an Earnings ESP of +4.03%. The Zacks Consensus Estimate for second-quarter fiscal 2026 earnings per share has risen by a couple of cents to $1.92 over the past 30 days, implying an increase of 23.1% from the year-ago period. The consensus estimate for revenues stands at $6.12 billion, which indicates a year-over-year increase of 10.7%. ROST has a trailing four-quarter earnings surprise of 10.2%, on average. The company will report numbers on Aug. 20, after the closing bell. 

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