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.
TJX's RSI Indicator stoops into oversold zone
The RSI Oscillator for TJX moved into overbought territory on April 18, 2024. Be on the watch for a price drop or consolidation in the future -- when this happens, think about selling the stock or exploring put options.
Technical Analysis (Indicators)
Bullish Trend Analysis
The Stochastic Oscillator shows that the ticker has stayed in the oversold zone for 10 days. The price of this ticker is presumed to bounce back soon, since the longer the ticker stays in the oversold zone, the more promptly an upward trend is expected.
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where TJX advanced for three days, in of 320 cases, the price rose further within the following month. The odds of a continued upward trend are .
The Aroon Indicator entered an Uptrend today. In of 291 cases where TJX Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .
Bearish Trend Analysis
The Momentum Indicator moved below the 0 level on April 03, 2024. You may want to consider selling the stock, shorting the stock, or exploring put options on TJX as a result. In of 81 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 April 03, 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 49 similar instances when the indicator turned negative. In of the 49 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 April 03, 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 April 11, 2024. This indicates that the trend has shifted lower and could be considered a sell signal. In of 19 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 .
TJX broke above its upper Bollinger Band on March 27, 2024. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.
Fundamental Analysis (Ratings)
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 78, 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 (3.862). P/E Ratio (25.829) is within average values for comparable stocks, (100.955). 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 (0.027) among similar stocks. P/S Ratio (2.131) is also within normal values, averaging (2.003).
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General Information
a chain of retail apparels and home fashions stores
Industry ApparelFootwearRetail