Stock (Symbol) |
TJX Companies (TJX) |
Stock Price |
$79 |
Sector |
| Retail & Travel |
Data is as of |
| January 23, 2018 |
Expected to Report |
| Feb 28 |
Company Description |
 The TJX Companies, Inc. (TJX) is an off-price apparel and home fashions. The Company operates through four segments: Marmaxx, HomeGoods, TJX Canada and TJX Europe. The Marmaxx and HomeGoods business offers family apparel, home fashions, accent furniture, lamps, rugs, wall decor, decorative accessories and giftware and other merchandise. The TJX Canada offers jewelry and home fashions. TJX Europe operates the T.K. Maxx and HomeSense chains in Europe. The Company operates approximately 3,461 stores in countries, including the United States, Canada, the United Kingdom, Ireland, Germany, Poland, Austria and Australia. Source: Thomson Financial |
Sharek’s Take |
 TJX Companies (TJX), known for its TJ Maxx and Marshall’s discount clothing stores, is expected to see a big rise in profit growth starting next qtr. Profits are expected to climb from 10% last qtr to 23%, 24%, 22% and 18% he next 4 qtrs. TJX is a powerhouse, with 1000 buyers in 10 countries around the world buying from 17,000 vendors in over 100 countries. The company traces its roots back to 1956 when the Zayre discount department store was founded. It opened its first T.J. Maxx in 1976, and eventually sold the Zayre brand to Ames in 1988. Then the company was renamed to The TJX Companies, Inc and focused on T.J. Maxx. It sees growth opportunity from the current 3500 stores to 5500 stores, and its U.S. brands now include:
TJX is the only major international off-price retailer in the world, operating:
TJX has my top safety rating and an A+ credit rating from Standard & Poor’s and has raised its dividend every year since 1996 at an average rate of more than 20% a year. The stock’s been an All-Time winner as its soared from $0.10 in 1980 to $79 today. TJX makes more than $3 billion a year in cash and spends more than half on stock buybacks. Store growth of 5% in addition to mid-single digit same store sales and a solid stock buyback program make it possible for TJX to grow profits around 10% a year long-term. Currency exchange has been hurting profits, and now that seems to be behind us. This stock has great upside in the coming year as my Fair Value of $99 a share is around 20% higher than the recent quote. This is a solid investment for conservative investors. |
One Year Chart |
 Last qtr the company reported 10% profit growth which met estimates. Profits would have grown 13% if it weren’t for the hurricanes. Bad weather hurt sales too, as same store sales were flat for the qtr. Mediocre results last qtr might be a reason this stock isn’t higher. But one-time events are acceptable. Two qtrs ago profit growth was reduced by 8% due to F/X. and last qtr it was a 4% positive impact. Profit estimates for 2018 surged from $4.24 to $4.48. Qtrly growth is expected to be a robust 23%, 24%, 22% and 18% the next 4 qtrs. |
Fair Value |
 Although TJX has an Est. LTG of just 10% a year, the stock should have a P/E much higher because (1) its excellent management keeps the checkout lines long with good styles and great deals (2) buys back stock and (3) has grown profits every year for more than a decade. My Fair Value is 22x earnings, which is very reasonable considering the profit growth that is expected during the next year. That gives the stock huge upside from current levels. |
Bottom Line |
 TJX has been a wonderful stock until recently when the strong USD cut into sales and profits. But last qtr that turned around as F/X gave profits a boost. Now the slow growth is behind us and TJX profits have some catching up to do. Therefore, it looks like this will be a good stock to own in 2018. TJX ranks 7th in the Conservative Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio 7 of 32 |
