The TJX Companies Inc.
) is set to report fourth-quarter fiscal 2014 results on Feb 26,
before the opening bell. Last quarter, this discount retailer
posted a positive surprise of 16.2%. Let us see how things are
shaping up prior to the announcement.
Factors to Consider This Quarter
TJX has been posting modest top- and bottom-line results for
the past few quarters backed by higher consumer traffic, improved
margins and solid comparable-store sales growth for consecutive
Although investors are confident of the stock, it is not
immune to the macro challenges that have impacted retailers this
holiday season. In particular, the inclement weather that gripped
northern U.S. during the fourth quarter is a significant
headwind. Moreover, a massive ice storm in Europe just prior to
Christmas impacted the company's Home goods and Marmaxx
Moreover, TJX has been lately focusing on opening stores in
off-mall locations enabling it to reach out to a larger consumer
base. However, during severe weather conditions, customers prefer
enclosed malls. Therefore, we expect TJX's near-term traffic
trends to be affected because of higher off-mall exposure in
regions facing severe weather conditions.
Though we are positive on the company's sound long-term
fundamentals, the current scenario is a cause of concern for
As a result of the abovementioned headwinds, other retailers
) trimmed their guidance due to a weak holiday season.
Our proven model does not conclusively show that TJX is likely
to beat earnings this quarter. That is because a stock needs to
have both a positive
and a Zacks Rank of #1, 2 or 3 for this to happen. That is
not the case here as you will see below.
Expected Surprise Prediction or ESP for TJX is -1.21% as the
Zacks Consensus Estimate of 83 cents is higher than the Most
Accurate estimate of 83 cents per share.
TJX's Zacks Rank #3 (Hold) lowers the predictive power of ESP
because the Zacks #3 Rank when combined with a negative ESP makes
surprise prediction difficult.
We caution against stocks with Zacks Rank #4 and 5 (Sell-rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Other stocks in the retail sector that have both a positive
earnings ESP and a favorable Zacks Rank are:
Foot Locker Inc
), Earnings ESP of +8.00% and a Zacks Rank #2 (Buy).
First Solar Inc.
), Earnings ESP of +8.00% and a Zacks Rank #3 (Hold).
FOOT LOCKER INC (FL): Free Stock Analysis
FIRST SOLAR INC (FSLR): Free Stock Analysis
KOHLS CORP (KSS): Free Stock Analysis Report
TJX COS INC NEW (TJX): Free Stock Analysis
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