Despite fears of an improving domestic economy leading consumers away from value-oriented retailers, The TJX Companies, Inc. ( TJX - Analyst Report ) , continues to deliver impressive results.

The company delivered a stellar 9% increase in February same-store sales on the heels of a very solid fourth quarter report. And analysts once again raised their estimates going forward, sending the stock to a Zacks #2 Rank (Buy).

Company Description

TJX is an off-price retailer that sells name-brand goods at significant discounts to their full-price peers. It does so by taking advantage of overstocking and canceled orders at the full-priced stores. TJX will buy this excess inventory at a steep discount and pass much of the savings on to its customers.

Its major stores include T.J. Maxx, Marshalls, and HomeGoods stores in the U.S.; Winners Apparel in Canada; and T.K. Maxx in Europe. The company was founded in 1956 and has a market cap of $29.4 billion.

Strong Same-Store Sales

TJX reported strong February sales growth. Net sales rose 12% over the same period last year, driven by a stellar 9% increase in same-store sales.

So far it doesn't look like the improving U.S. economy is causing consumers to leave off-price retailers like TJX and "trade up" to the full-priced stores.

Solid Fourth Quarter Results

TJX also delivered solid fourth quarter results for its fiscal 2012 on February 22. Net sales rose 6% to $6.71 billion, driven by a 7% increase in same-store sales.

Same-store sales were up across all brands and geographies, including a 10% increase at Home Goods, and a 10% increase at TJX in Europe.

Earnings per share came in at 62 cents, in-line with the Zacks Consensus Estimate. It was a 17% increase over the same quarter last year.

Growth Ahead

Management provided a positive outlook for its fiscal 2013. The company expects to earn between $2.21 and $2.31 per share on same-store sales growth of 2-4%.

This prompted analysts to revise their estimates higher, sending the stock to a Zacks #2 Rank (Buy).

The Zacks Consensus Estimate for 2013 is now $2.32, slightly above guidance, and representing 17% growth over 2012 EPS. The 2014 consensus estimate also moved higher and is currently at $2.56, corresponding with 10% EPS growth.

This year the company plans to invest in its supply chain and infrastructure, new stores, remodels, and building an e-commerce business to support long-term growth. The 5-year consensus EPS growth rate for TJX is a solid 14%.

Returning Value to Shareholders

With strong cash flow and a solid balance sheet, the company continues to return value to shareholders through stock buybacks and dividend increases.

In fiscal 2012, the company spent a whopping $1.4 billion repurchasing its stock. And it also announced plans to buyback approximately $1.2-$1.3 billion more for fiscal 2013.

The company also pays a dividend that yields a solid 2.0%. And management stated that it intends to increase its dividend by 21% pending approval by the board of directors.

This would mark the 16th straight year that the company has raised its dividend. And over that time, it has increased it at a compound annual rate of 23%.

Valuation

Although shares have soared 50% since I last wrote about TJX back on September 9, valuation still looks reasonable. Shares trade at 16.5x 12-month forward earnings, a discount to the industry median of 17.9x.

It also sports a PEG ratio of 1.2.

The Bottom Line

With consumers still busting through the doors and estimates still rising, TJX still offers a lot of upside potential.

Read the September 9 article here.

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Todd Bunton is the Growth & Income Stock Strategist for Zacks Investment Research and Co-Editor of the Reitmeister Value Investor.