The TJX Companies (NYSE: TJX)
Quality Value Investing Research Report | $TJX Updated Coverage | May 2024
Summary:
The TJX Companies is a dividend-paying large-cap stock in the consumer discretionary sector’s off-price apparel retail industry.
In a review of the company’s current wealth, TJX has superior inventory management, a powerhouse global buyer network, and consistent financial performance.
However, in analyzing the stock’s present value, TJX trades at fair value to a premium price despite low downside risks.
QVI maintains its coverage rating of TJX in the Concentrated Real-Time Picks as a result of this updated research report.
When referencing this research report, access your Quality Value Investing (QVI) Glossary of Investing Terms and Metric Targets and Research Report Format Guide. Unless noted, all data presented is sourced from Seeking Alpha Premium as of the market close on April 30, 2024, and intended for illustration only.
In this updated coverage QVI Research Report, we’ll reexamine the Concentrated Real-Time Stock Picks consumer discretionary sector holding, The TJX Companies, Inc., to see if it continues to meet Quality Value Investing’s investment criteria based on our checklist analysis of the business’s current wealth and its stock’s present value.
TJX: Company Current Wealth
Value Proposition
The TJX Companies, Inc. TJX 0.00%↑ is a dividend-paying large-cap stock in the consumer discretionary sector’s apparel retail industry. It was added to the QVI Real-Time Stock Picks on May 23, 2017, at a cost basis of $33.76 a share, adjusted for splits and dividends.
The TJX Companies, Inc., together with its subsidiaries, operates as an off-price apparel and home fashions retailer in the United States, Canada, Europe, and Australia. It operates through four segments: Marmaxx, HomeGoods, TJX Canada, and TJX International.
The company sells family apparel, including footwear and accessories; home fashions, such as home basics, furniture, rugs, lighting products, giftware, soft home products, decorative accessories, tabletop, and cookware, as well as expanded pet, and gourmet food departments; jewelry and accessories; and other merchandise. It offers its products through stores and e-commerce sites.
The TJX Companies, Inc. was incorporated in 1962 and is headquartered in Framingham, Massachusetts, USA.
Economic Moat
Morningstar assigns TJX a wide moat rating, upgraded from narrow based on the company’s brand strength, cost advantages, and returns in excess of capital costs.
QVI’s Value Proposition Elevator Pitch for TJX:
The TJX Companies has superior inventory management, a powerhouse global buyer network, and consistent financial performance.
QVI’s value proposition rating for TJX Companies: Bullish.
Returns on Management
Revenue Growth and Net Profit Margin
Per the chart below, TJX’s trailing three-year annualized revenue growth was mid-double-digits and far outperformed the consumer discretionary sector’s +3.16% median growth. Notably, the company’s topline growth tempered to +8.57% for the most recently reported twelve months.
Farther down the income statement, TJX’s three-year, mid-single-digit net profit margin aligned with the sector’s median net margin of +4.57%.
Returns on Equity and Invested Capital
TJX’s senior management produced a three-year high double-digit return on equity, or ROE, well above QVI’s targeted threshold and the sector’s median ROE of +11.42%.
Stock buyback programs often elevate ROE. For example, in early April, TJX initiated a new $2-2.5 billion share repurchase program for the next fiscal year after announcing a 13% hike in its quarterly dividend rate.
TJX’s three-year return on invested capital, or ROIC, tripled QVI’s threshold and trounced the sector’s median ROIC of +6.01%. Moreover, TJX’s ROIC far exceeded its weighted average cost of capital, or WACC, of 8.17%, demonstrating that its senior executives are outstanding capital allocators. (Source of WACC: GuruFocus)
QVI’s business fundamentals rating for The TJX Companies.: Bullish.
Next, we’ll look at the company’s returns on management chart, enterprise downsize risks, the stock price’s present value, share price downside risks, and the investment thesis, each exclusive to Quality Value Investing’s premium (paying) subscribers.
Disclosure: At the time of this writing, I/we had a beneficial long position of TJX common shares in our family portfolio. I wrote this report myself, and it expresses my own opinions. I am not receiving compensation for it other than from Substack paid subscriptions. I have no business relationship with any company whose stock is mentioned in this post.
Additional Disclosure: Quality Value Investing by David J. Waldron’s primary ticker research reports are for informational purposes only. The accuracy of the data cannot be guaranteed. Narrative and analytics are impersonal, i.e., not tailored to individual needs nor intended for portfolio construction beyond his family portfolio, which is presented solely for educational purposes. David is an individual investor and author, not an investment adviser. Readers should always engage in their own research or due diligence and consider (as appropriate) consulting a fee-only certified financial planner, licensed discount broker/dealer, flat fee registered investment adviser, certified public accountant, or specialized attorney before making any investment, income tax, or estate planning decisions.