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Will TJX Companies (TJX) Surprise this Earnings Season? - Analyst Blog

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The TJX Companies Inc. ( TJX ) is set to report fourth-quarter and fiscal 2015 results on Feb 25, before the opening bell. Last quarter, the company posted in-line results. Let's see how things are shaping up for this announcement.

Factors to Consider

TJX has been posting modest earnings and revenue results over the past few quarters backed by higher consumer traffic, improved margins and solid comparable-store sales growth. Moreover, the recently concluded holiday season is expected to boost fourth-quarter top line as dollar stores like TJX become the obvious choice of value-seeking consumers during this period. Additionally, the persistent slowdown in the West Coast port due to labor disputes is expected to be a boon for the off price retailer. This is because the slowdown of activities in West Coast Europe is expected to increase inventories for full-time retailers who are expected to pass them on to the dollar stores like TJX at lower costs.

However, the company is not immune to the macro challenges that have impacted retailers since the beginning of this year. The ice storms that hit the coasts resulted in unusual cold weather in Jan 2015. This disrupted usual shopping trends and is likely to affect the company's top line in the fourth quarter.

Earnings Whispers

Our proven model does not conclusively show that TJX Companies is likely to beat earnings this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 to surpass earnings estimate. However, that is not the case here due to the following factors:

Zacks ESP: ESP for TJX is -1.11%. This is because the Most Accurate estimate is 90 cents and the Zacks Consensus Estimate is 89 cents.

Zacks Rank: TJX currently has a Zacks Rank #3 (Hold). However, we need to have a positive ESP to be confident about an earnings surprise.

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.

Stocks to Consider

Some stocks in the consumer staples sector that have both a positive Earnings ESP and a favorable Zacks Rank are:

Sanderson Farms Inc. ( SAFM ), with an Earnings ESP of +10.87% and a Zacks Rank #1 (Strong Buy).

Kohl's Corp. ( KSS ), with an Earnings ESP of +0.56% and a Zacks Rank #2 (Buy).

Urban Outfitter Inc. ( URBN ), with an Earnings ESP of +1.79% and a Zacks Rank #3.

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


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

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