Investors feel bullish heading into the third-quarter earnings report from Target (TGT 0.96%). After two blockbuster updates so far in 2021, the retail chain is expected to reveal more head-turning growth metrics for the selling period that ended in late September. Management might make positive comments about the holiday season ahead, too, despite supply chain issues and significant price inflation.

With that big picture in mind, let's look at the key numbers to watch in that operating update, set for Wednesday, Nov. 17.

A person shopping for a new TV.

Image source: Getty Images.

Market share

Sales growth should be strong, given the retailer's momentum this year. Revenue last quarter grew 9% on top of Target's record surge of 24% a year earlier. Most investors who follow the stock are looking for similar gains this week, with sales rising about 10% to $24.5 billion. That spike will come on top of last year's 21% Q3 sales surge.

Beyond that headline revenue number, watch for CEO Brian Cornell and his team to highlight the chain's market-share wins. Management estimated that Target attracted over $10 billion in new share since the pandemic started, meaning it is serving many new customers in niches like home furnishings, apparel, and consumer electronics. Investors are hoping that this week's report shows no signs that these shoppers are becoming less engaged with Target's stores or its digital selling platform.

Operating margin

Target is pairing its market share wins with expanding profit margins lately. Operating margin recently jumped toward 10% of sales compared to around 7% of sales before the pandemic.

TGT Operating Margin (TTM) Chart

TGT Operating Margin (TTM) data by YCharts

The retailer's expanding sales footprint is helping push that figure higher. But the bigger factors lifting profitability are the chain's premium and exclusive merchandise and its popular e-commerce fulfillment offerings.

Shoppers last quarter enthusiastically signed up for same-day delivery services, and another strong period there should support rising profits. Investors are looking for earnings per share to edge up to $2.81 from $2.79.

The outlook

Executives said in August that profit margins will be pressured in the second half of the year due to supply chain challenges and rising costs. We'll find out this week whether Target is still on track to achieve about 8% operating margin in 2021. Investors will also get a key update on the peak holiday shopping season that kicks off in just a few days.

Heading into the report, management's forecast calls for comparable-store sales gains in the high single digits. But Target could change that prediction based on the latest demand trends and its inventory position here at the start of the fourth quarter.

The most likely unpleasant surprise here would be that the chain reduces earnings expectations as it prioritizes market share through the competitive selling period. Rising costs on things like home delivery might not be passed along quickly to shoppers in Q4.

But investors shouldn't see that as a reason to worry about the business. Target has led the retail industry through the pandemic period and is emerging from the crisis with a much stronger operating posture. That's great news for long-term shareholder returns.