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May 27, 2019

TJX (TJX, $$51.62) holds strong amidst challenging retail scenario

In a cunning move, TJX survived even though many of its brick-and-mortar peers crumbled by selling products cheaper than Amazon, quickly rotating products to retain customers, and channeling clearance products from other retailers through its own shelves.

As per its latest Q1 filing, TJX’s comparable store sales rose 5% ahead of its 3% growth last year. It clocked in a total revenue rise of 7% to $9.3 billion ahead of forecasts by nearly $70 million. Even though its net income fell by 2% to $700 million, its buybacks enhanced its EPS by a penny to $0.57 beating estimates by three cents.

If its full-year comps rose by 2% - 3%, it would mark the company’s 24th consecutive year of positive comps growth. It increased its full-year EPS guidance by a penny which means that it is expecting its earnings to grow 5%-7%.

Analysts posit a number of reasons behind the company’s resilience. At a time of the e-commerce giant Amazon is crushing smaller retailers, TJX brings down their inventories at rock-bottom prices. This strategy enables the company to sell its products at a 20%-60% discount couple by a quick rotation of the products.

The company also invests considerably its excess cash on buybacks and dividends. During the first quarter, it brought back $350 million in shares that shot up its stock by nearly 20%. It also plans to repurchase up to $2.25 billion in shares for the full year accounting for 3% of the current market cap.

However solid the core business looks lower merchandise margin, higher supply chain costs, higher freight costs, and new store openings caused its gross margin to contract 40 basis points annually to 28.5%. It is expected that its Q2 gross margin to hover between 28.2% and 28.3% versus 28.9% a year earlier.

Despite the headwinds recently worsened by the U.S tariff hike on Chinese goods, analysts are optimistic that TJX is the best bet in the crumbling retail scenario.

Related Ticker: TJX

TJX's RSI Indicator ascending out of oversold territory

The RSI Oscillator for TJX moved out of oversold territory on October 08, 2024. This could be a sign that the stock is shifting from a downward trend to an upward trend. Traders may want to buy the stock or call options. The A.I.dvisor looked at 18 similar instances when the indicator left oversold territory. In of the 18 cases the stock moved higher. This puts the odds of a move higher at .

Price Prediction Chart

Technical Analysis (Indicators)

Bullish Trend Analysis

The Stochastic Oscillator demonstrated that the ticker has stayed in the oversold zone for 1 day, which means it's wise to expect a price bounce in the near future.

Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where TJX advanced for three days, in of 330 cases, the price rose further within the following month. The odds of a continued upward trend are .

TJX may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.

Bearish Trend Analysis

The Momentum Indicator moved below the 0 level on October 28, 2024. You may want to consider selling the stock, shorting the stock, or exploring put options on TJX as a result. In of 84 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are .

The Moving Average Convergence Divergence Histogram (MACD) for TJX turned negative on October 23, 2024. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 48 similar instances when the indicator turned negative. In of the 48 cases the stock turned lower in the days that followed. This puts the odds of success at .

TJX moved below its 50-day moving average on October 21, 2024 date and that indicates a change from an upward trend to a downward trend.

The 10-day moving average for TJX crossed bearishly below the 50-day moving average on October 10, 2024. This indicates that the trend has shifted lower and could be considered a sell signal. In of 20 past instances when the 10-day crossed below the 50-day, the stock continued to move higher over the following month. The odds of a continued downward trend are .

Following a 3-day decline, the stock is projected to fall further. Considering past instances where TJX declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .

The Aroon Indicator for TJX entered a downward trend on October 16, 2024. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.

The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating low risk on high returns. The average Profit vs. Risk Rating rating for the industry is 75, placing this stock better than average.

The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.

The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating steady price growth. TJX’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.

The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.

The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is slightly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: TJX's P/B Ratio (15.552) is very high in comparison to the industry average of (3.843). P/E Ratio (25.829) is within average values for comparable stocks, (106.594). TJX's Projected Growth (PEG Ratio) (2.591) is slightly higher than the industry average of (1.444). Dividend Yield (0.013) settles around the average of (0.028) among similar stocks. P/S Ratio (2.131) is also within normal values, averaging (1.249).

The Tickeron Seasonality Score of (best 1 - 100 worst) indicates that the company is significantly overvalued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.

Notable companies

The most notable companies in this group are TJX Companies (null:TJX), lululemon athletica (null:LULU), Gap Inc (The) (null:GAP), Abercrombie & Fitch Co (null:ANF), Foot Locker (null:FL), Guess (null:GES), Stitch Fix (null:SFIX).

Industry description

Companies in the apparel and/or footwear retail industry sell clothing, accessories and footwear, for different age groups and genders. The industry’s product categories could range from basics, such as underwear, to luxury items. Some retailers source items from wholesalers or an apparel brand to sell in their stores; some others are licensed to make and market their own retail goods under particular brands. Several companies outsource production of clothing to developing/emerging economies where labor costs are relatively inexpensive. Apparel retail is often influenced by fashion trends, and many companies feel the need to adapt to what’s “in vogue” to retain customers and attract new ones. A major disruption in this industry has been the burgeoning trend in digital shopping – to compete with rapidly growing e-commerce, even traditional retail players are upping the ante on their online platforms. Much of the products’ performance in apparel/footwear retail is cyclical, i.e., economic boom times encourage consumer spending, while recessions induce thriftiness among people. Some large-cap U.S. apparel/footwear retail companies include TJX Companies Inc., Ross Stores, Inc., Lululemon Athletica Inc. and Burlington Stores, Inc.

Market Cap

The average market capitalization across the Apparel/Footwear Retail Industry is 13.34B. The market cap for tickers in the group ranges from 256K to 119.4B. IDEXY holds the highest valuation in this group at 119.4B. The lowest valued company is DESTQ at 256K.

High and low price notable news

The average weekly price growth across all stocks in the Apparel/Footwear Retail Industry was -2%. For the same Industry, the average monthly price growth was 3%, and the average quarterly price growth was 5%. TPSRF experienced the highest price growth at 31%, while DBGI experienced the biggest fall at -38%.

Volume

The average weekly volume growth across all stocks in the Apparel/Footwear Retail Industry was -34%. For the same stocks of the Industry, the average monthly volume growth was 27% and the average quarterly volume growth was 46%

Fundamental Analysis Ratings

The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows

Valuation Rating: 55
P/E Growth Rating: 51
Price Growth Rating: 57
SMR Rating: 65
Profit Risk Rating: 75
Seasonality Score: 45 (-100 ... +100)
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A.I.Advisor
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published General Information

General Information

a chain of retail apparels and home fashions stores

Industry ApparelFootwearRetail

Profile
Fundamentals
Details
Industry
Apparel Or Footwear Retail
Address
770 Cochituate Road
Phone
+1 508 390-1000
Employees
329000
Web
https://www.tjx.com
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