US budget retail chain Target (TGT:NASDAQ) posts its fourth quarter earnings on Tues 5 March and investors will be hoping they help sustain the recent momentum in the share price.

The company has recently created a new ‘value’ brand with prices for everyday basics that start at under $1 per item. This shows it is attuned to the continuing pressure on households and positioning itself to take advantage of shoppers trading down, although what kind of margin the company can achieve on such low-ticket sales is open to question.

The shares have made strong progress since mid-November when third-quarter revenue and earnings blew past forecasts with sales of food and beauty products offsetting weaker discretionary spending. Significantly, this update saw a substantial improvement in profitability thanks to easing supply chain costs and efforts to control inventories.

Following their strong run the shares trade on 16.6 times consensus forecast earnings for the 12 months to 31 January 2025. This is slightly above the average multiple for the last year of around 15 times.

The company targeted investment of $5 billion in 2023 to revamp its store portfolio and build up the technology and the team underpinning the business. Investors will be monitoring this latest update to see what, if any, further expenditure is planned. 

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