TJX Companies Inc (TJX) Quote - XNYS | Morningstar

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Strong Third Quarter Margins Indicate TJX’s Strength Amid Inflation, but the Shares Seem Expensive

Equity Analyst Zain Akbari

Zain Akbari, CFA Equity Analyst

Analyst Note

| Zain Akbari, CFA | Nov 17, 2021

Our $62 per share valuation of narrow-moat TJX should rise by a mid-single-digit percentage, reflecting strong third-quarter fiscal 2022 profitability and the time value of money. Although we are encouraged by TJX’s recent pricing moves, our long-term targets remain intact (mid-single-digit percentage sales growth, low-double-digit adjusted operating margins, expected on average long term). We suggest investors await a more attractive entry point, as we believe the shares’ trading price leaves little room for error.

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Company Profile

Business Description

TJX is a leading off-price retailer of apparel, home fashions, and other merchandise. It sells a variety of branded goods, opportunistically buying inventory from a network of over 21,000 vendors worldwide. TJX targets undercutting conventional retailers' regular prices by 20%-60%, capitalizing on a flexible merchandising network, relatively low-frills stores, and a treasure-hunt shopping experience to drive margins and inventory turnover. TJX derived 79% of fiscal 2021 revenue from the United States, with 11% from Europe (mostly the United Kingdom and Germany), 9% from Canada, and the remainder from Australia. The company operated 4,572 stores at the end of fiscal 2021 under the T.J. Maxx, T.K. Maxx, Marshalls, HomeGoods, Winners, Homesense, Winners, and Sierra banners.

Contact

770 Cochituate Road
Framingham, MA, 01701

T +1 508 390-1000

Sector Consumer Cyclical

Industry Apparel Retail

Most Recent Earnings Oct 31, 2021

Fiscal Year End Jan 29, 2022

Stock Type Cyclical

Employees 320,000

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