This edge should enable it to gain market share.
has been getting a lot of attention from Wall Street analysts recently, as it has received several price target upgrades.
The retail conglomerate, which owns Marshalls, TJ Maxx, Sierra, and HomeGoods, received no fewer than 13 price target upgrades after it released quarterly earnings last week. Most notably, UBS boosted its target by $8 to $172 per share, while Citi bumped it up $20 to $160 per share. Those are just two examples but all of the major firms, from Goldman Sachs to JPMorgan Chase, are bullish on TJX stock, which is considered a buy by most analysts.
The company easily beat revenue and earnings estimates in its fiscal second quarter. Here are the key results:
Net sales increased 7% to $14.4 billion, beating estimates of $14.1 billion.
Net income rose 13% to $1.24 billion, or $1.10 per share, topping estimates of $1.01 per share.
Comparable store sales rose 4%, beating estimates. TJX Canada led the way with a 9% increase, while TJX International saw a 5% increase.
Gross profit margin was 30.7%, up from 30.4% in the same quarter a year ago. Merchandise margin was flat despite higher tariff costs versus last year.
Pretax profit margin was 11.4%, which was up from 10.9% a year ago and beyond estimates.
Selling, general, and administrative (SG&A) costs as a percentage of sales were 19.5%, down from 19.8% a year ago.
“Customer transactions were up at every division as we saw strong demand at each of our U.S. and international businesses. Our teams across the Company successfully executed our off-price business fundamentals to deliver an exciting treasure hunt of merchandise at great value to our customers, every day,” Ernie Herrman, CEO and president of TJX, said.
The One Thing That Sets TJX Apart
Why analysts are bullish on TJX stock stems from a couple of factors. One, it offers clothes and goods at discount prices compared to other retailers, which makes it more popular in a challenging economic environment.
But more importantly, TJX sees limited impacts from tariffs because of its business model. That allows the company to keep prices lower than its competitors, which is driving sales and market share gains.
Because it buys most of its merchandise from third parties, about 90%, it doesn’t directly import that much – only about 10% or less. That allows it to keep tariffs costs in check.
“One of the strengths of our buying teams is they are aggressively comp shopping, all of the competition, whether it’s online, brick and mortar, vertical brands, department stores, specialty stores. And so, I give them a lot of credit, by the way. We’ve been navigating in the tariff environment by just staying simple and pure to that model,” Hermann said on the Q2 earnings call.
Larry Tentarelli, chief technical strategist at the Blue Chip Daily Trend Report, said TJX is their top ranked general retail stock.
Raising Its Guidance
TJX has raised its earnings guidance for the full year, thanks to the strong performance in the second quarter.
“Our teams are energized by the opportunities we see in the marketplace for excellent brands and fashions and our initiatives to keep attracting shoppers to our retail brands. Longer term, we are convinced that we have a long runway ahead to capture additional market share and continue our successful growth around the world,” Hermann said.
Q3 comparable sales are expected to be up 2% to 3% year-over-year.
Q3 EPS is anticipated to be in the range of $1.17 to $1.19 per share, which would represent a 3% to 4% increase year-over-year.
Full year comparable sales are targeted to rise 3%.
Full year EPS is estimated to be in the range of $4.52 to $4.57, which would represent a 6% to 7% increase over the previous year.
TJX stock is up 13% year-to-date and has a median price target of about $154 per share, which would suggest 12% growth. It is trading at 30 times earnings and 29 times forward earnings.
It is a little pricey, but the sales upside when others may be struggling make it a stock to consider.