The TJX Companies, Inc. - Growth & Income

By
A A A
Share |

Despite fears of an improving domestic economy leading consumers away from value-oriented retailers, The TJX Companies, Inc. ( TJX ), continues to deliver impressive results.

The company delivered a stellar 9% increase in February same-store sales on the heels of a very solid fourth quarter report. And analysts once again raised their estimates going forward, sending the stock to a Zacks #2 Rank (Buy).

Company Description

TJX is an off-price retailer that sells name-brand goods at significant discounts to their full-price peers. It does so by taking advantage of overstocking and canceled orders at the full-priced stores. TJX will buy this excess inventory at a steep discount and pass much of the savings on to its customers.

Its major stores include T.J. Maxx, Marshalls, and HomeGoods stores in the U.S.; Winners Apparel in Canada; and T.K. Maxx in Europe. The company was founded in 1956 and has a market cap of $29.4 billion.

Strong Same-Store Sales

TJX reported strong February sales growth. Net sales rose 12% over the same period last year, driven by a stellar 9% increase in same-store sales.

So far it doesn't look like the improving U.S. economy is causing consumers to leave off-price retailers like TJX and "trade up" to the full-priced stores.

Solid Fourth Quarter Results

TJX also delivered solid fourth quarter results for its fiscal 2012 on February 22. Net sales rose 6% to $6.71 billion, driven by a 7% increase in same-store sales.

Same-store sales were up across all brands and geographies, including a 10% increase at Home Goods, and a 10% increase at TJX in Europe.

Earnings per share came in at 62 cents, in-line with the Zacks Consensus Estimate. It was a 17% increase over the same quarter last year.

Growth Ahead

Management provided a positive outlook for its fiscal 2013. The company expects to earn between $2.21 and $2.31 per share on same-store sales growth of 2-4%.

This prompted analysts to revise their estimates higher, sending the stock to a Zacks #2 Rank (Buy).

The Zacks Consensus Estimate for 2013 is now $2.32, slightly above guidance, and representing 17% growth over 2012 EPS. The 2014 consensus estimate also moved higher and is currently at $2.56, corresponding with 10% EPS growth.

This year the company plans to invest in its supply chain and infrastructure, new stores, remodels, and building an e-commerce business to support long-term growth. The 5-year consensus EPS growth rate for TJX is a solid 14%.

Returning Value to Shareholders

With strong cash flow and a solid balance sheet, the company continues to return value to shareholders through stock buybacks and dividend increases.

In fiscal 2012, the company spent a whopping $1.4 billion repurchasing its stock. And it also announced plans to buyback approximately $1.2-$1.3 billion more for fiscal 2013.

The company also pays a dividend that yields a solid 2.0%. And management stated that it intends to increase its dividend by 21% pending approval by the board of directors.

This would mark the 16th straight year that the company has raised its dividend. And over that time, it has increased it at a compound annual rate of 23%.

Valuation

Although shares have soared 50% since I last wrote about TJX back on September 9, valuation still looks reasonable. Shares trade at 16.5x 12-month forward earnings, a discount to the industry median of 17.9x.

It also sports a PEG ratio of 1.2.

The Bottom Line

With consumers still busting through the doors and estimates still rising, TJX still offers a lot of upside potential.

Read the September 9 article here.

This Week's Growth & Income Zacks Rank Buy Stocks:

Entertainment Properties Trust ( EPR ) offers investors strong growth and stellar income at a reasonable price. Based on consensus estimates, analysts project 13% funds from operation (FFO) growth this year and 7% growth next year. And these estimates have been on the upswing after management raised its 2012 guidance following better than expected fourth quarter results. It is a Zacks #2 Rank (Buy). It also pays a dividend that yields a whopping 6.1%. Read the full article.

T. Rowe Price Group, Inc. ( TROW ) benefits directly from a rising stock market. The company delivered strong fourth quarter results and has seen its earnings estimates rise over the last few weeks, thanks in part to the strongest start to a year for the S&P in 14 years. It is a Zacks #2 Rank (Buy). In addition to strong growth, the company offers a dividend that yields a solid 2.1%. Read the full article.

Rockwell Collins, Inc. ( COL ) offers investors solid growth and income at a very reasonable price. Based on current consensus estimates, analysts project double-digit EPS growth over the next two years. On top of this, the company pays a dividend that yields a solid 1.6%. And estimates have been rising after the company delivered better than expected fourth quarter results. Read the full article.

Ambev ( ABV ) delivered better than expected Q4 results on March 8. Management also stated that remains positive for 2012 as disposable incomes continue to rise in Brazil. It is a Zacks #2 Rank (Buy) stock. In addition to strong growth potential, the company pays a dividend that yields a stellar 3.8%. Read the full article.

Todd Bunton is the Growth & Income Stock Strategist for Zacks Investment Research and Co-Editor of the Reitmeister Value Investor .


 
TJX COS INC NEW ( TJX ): Free Stock Analysis Report
 
To read this article on Zacks.com click here.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks

Referenced Stocks: TJX

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

100%

Most Active by Volume

52,918,797
  • $16.185 ▲ 0.34%
40,494,746
  • $59.15 ▼ 0.95%
39,419,212
  • $26.73 ▲ 2.34%
25,329,374
  • $86.065 ▼ 0.13%
21,294,060
  • $23.455 ▲ 4.34%
19,963,611
  • $23.06 ▲ 0.13%
18,645,933
  • $9.1101 ▼ 2.15%
18,202,408
  • $26.99 ▲ 0.22%
As of 4/17/2014, 12:33 PM