Will TJX (TJX, $53.22) and Ross Stores (ROST, $97.14) be able to beat headwinds facing retail industry?
2018 was a strong year for major U.S retailers including off-price giants like TJX Companies and Ross Stores whose comparable-store sales grew 6% and 4% respectively during the year.
However, with the retail industry experiencing some strong headwinds over the last months owing to a volatile market and many retailers have already experienced sales slowdowns.
TJX and Ross Stores are scheduled to report their first-quarter results next week and the investors are worrying whether they too succumbed to the headwinds. However, there are good reasons to hope that it may not be the case and the companies have managed to carve out a decent quarter in terms of sales.
One of the primary reasons for the optimism about TJX and Ross’s quarterly results is their consistency. 2018 was the fourth consecutive year when Ross posted a 4% comp sales increase. TJX too averaged 4% comp-sales growth over the period gaining 6% in 2018, 2% in 2017, and 5% in 2016.
Another reason is that both the companies have a conservative approach towards forecasts and in most cases, they exceed those forecasts. So the investors can hope that they will meet their targets even when the market is volatile.
In keeping with this approach, Ross anticipates comp sales rise up to 2% in Q1, earnings per share would come in between $1.05 and $1.11 compared to $1.11 in 2018, and total sales to rise almost 6% to $3.79 billion with EPS of $1.12.
On the other hand, TJX expects a 2% to 3% comp sales gain but EPS may get hurt by 7% owing to higher freight costs, wage increases, and currency headwinds. Total sales are expected to rise 6% to $9.21 billion with an EPS of $0.55.
Furthermore, following the recent tariff raise on $200 billion Chinese imports which may further increase, the retail industry is in for some serious long term threats. But the exact nature of impact is still not clear and while TJX and Ross’s track records may inspire assurance, there’s still no guarantee in investing.
TJX's RSI Oscillator entering oversold zone
The RSI Indicator 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