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Shares of both TJX Companies (TJX - Free Report) and Kohl's (KSS - Free Report) have soared over the last year to blow away the S&P 500 and crush their industry’s average. Now, with the retail portion of Q3 earnings season heating up, let’s see which stock looks like a better buy: TJX or KSS.
Quick Q3 Overview
As of Wednesday, 19 members of the S&P 500’s retail sector had reported their quarterly financial results. Overall, these members saw their earnings jump 37.5% on 10.7% revenue growth (also read: Can Retail Stocks Build on Their Recent Gains?).
Plus, 89.5% of the retailers topped quarterly earnings estimates and 63.2% beat top line projections. Yet, most of those results were from online sellers and restaurants, which includes Amazon (AMZN - Free Report) .
Home Depot (HD - Free Report) helped kick off earnings season for the more traditional brick-and-mortar companies earlier this week. Since then, Walmart (WMT - Free Report) and Macy's (M - Free Report) both posted better-than-expected earnings results. Meanwhile, Nordstrom (JWN - Free Report) fell short of earnings projections and we are still waiting on Target (TGT - Free Report) .
Price Movement
Now that we have a sense of what is going on with some of the biggest retail players, let’s dive into TJX and Kohl's.
KSS stock is up roughly 35% over the last five years. This falls below the S&P’s 54% jump and includes a huge downturn. Meanwhile, TJX stock has surged roughly 68% over this same stretch. As we noted at the top, the two retailers have seen their stock prices soar over the last year.
TJX stock closed regular trading Thursday at $52.47 per share, down roughly 7% from its 52-week high of $56.64 per share. Kohl's, on the other hand, saw its stock price sink 3.40% during regular trading Thursday to hit $73.22 per share. This marked a 12% decline from its year-long high of $83.28 per share.
Valuation
Moving on, KSS stock is currently trading at 13.2X forward 12-month Zacks Consensus EPS estimates, which represents a discount compared to its industry’s 24.3X average and the S&P’s 16.2X. Kohl’s stock is also currently trading below its 52-week high of 16X and right at its one-year median.
TJX stock is trading at 19.7X at the moment, which rests below its 52-week high of 21.3X but above its year-long low of 16.2X. Jumping back over the last five years we can see that Kohl's has consistently traded at a discount compared to its counterpart.
Q3 Outlook
Looking ahead, TJX is projected to see its Q3 revenues jump by 8.4% to reach $9.50 billion, based on our current Zacks Consensus Estimate. The firm is also expected to see its adjusted quarterly earnings surge by 22% to hit $0.61 per share.
Meanwhile, our consensus estimate is calling for Kohl's to post quarterly revenues of $4.62 billion. This would mark a 6.62% surge from the year-ago period. Better yet, the retailer’s adjusted quarterly earnings are projected to soar over 37% to hit $0.96 per share.
Bottom Line
Kohl's is currently a Zacks Rank #2 (Buy) that sports “A” grades for Value, Growth, and Momentum in our Style Scores system. The company has received a good chunk of upward earnings estimate revisions for its current fiscal year and the following year, while its Q3 trends have been more mixed.
TJX rocks “A's” for both Growth and Value and is also currently a Zacks Rank #2 (Buy), based on recent positive upward earnings estimate revision activity for both Q3 and its current fiscal year.
Both companies also pay dividends, which makes declaring a winner in this situation more difficult. Therefore, it seems like either stock might be worth thinking about at the moment, although KSS stock presents better value.
The two retailers are both scheduled to release their Q3 financial results before the opening bell on Tuesday.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Image: Bigstock
Better Q3 Retail Buy: TJX Companies (TJX) vs. Kohl's (KSS) Stock
Shares of both TJX Companies (TJX - Free Report) and Kohl's (KSS - Free Report) have soared over the last year to blow away the S&P 500 and crush their industry’s average. Now, with the retail portion of Q3 earnings season heating up, let’s see which stock looks like a better buy: TJX or KSS.
Quick Q3 Overview
As of Wednesday, 19 members of the S&P 500’s retail sector had reported their quarterly financial results. Overall, these members saw their earnings jump 37.5% on 10.7% revenue growth (also read: Can Retail Stocks Build on Their Recent Gains?).
Plus, 89.5% of the retailers topped quarterly earnings estimates and 63.2% beat top line projections. Yet, most of those results were from online sellers and restaurants, which includes Amazon (AMZN - Free Report) .
Home Depot (HD - Free Report) helped kick off earnings season for the more traditional brick-and-mortar companies earlier this week. Since then, Walmart (WMT - Free Report) and Macy's (M - Free Report) both posted better-than-expected earnings results. Meanwhile, Nordstrom (JWN - Free Report) fell short of earnings projections and we are still waiting on Target (TGT - Free Report) .
Price Movement
Now that we have a sense of what is going on with some of the biggest retail players, let’s dive into TJX and Kohl's.
KSS stock is up roughly 35% over the last five years. This falls below the S&P’s 54% jump and includes a huge downturn. Meanwhile, TJX stock has surged roughly 68% over this same stretch. As we noted at the top, the two retailers have seen their stock prices soar over the last year.
TJX stock closed regular trading Thursday at $52.47 per share, down roughly 7% from its 52-week high of $56.64 per share. Kohl's, on the other hand, saw its stock price sink 3.40% during regular trading Thursday to hit $73.22 per share. This marked a 12% decline from its year-long high of $83.28 per share.
Valuation
Moving on, KSS stock is currently trading at 13.2X forward 12-month Zacks Consensus EPS estimates, which represents a discount compared to its industry’s 24.3X average and the S&P’s 16.2X. Kohl’s stock is also currently trading below its 52-week high of 16X and right at its one-year median.
TJX stock is trading at 19.7X at the moment, which rests below its 52-week high of 21.3X but above its year-long low of 16.2X. Jumping back over the last five years we can see that Kohl's has consistently traded at a discount compared to its counterpart.
Q3 Outlook
Looking ahead, TJX is projected to see its Q3 revenues jump by 8.4% to reach $9.50 billion, based on our current Zacks Consensus Estimate. The firm is also expected to see its adjusted quarterly earnings surge by 22% to hit $0.61 per share.
Meanwhile, our consensus estimate is calling for Kohl's to post quarterly revenues of $4.62 billion. This would mark a 6.62% surge from the year-ago period. Better yet, the retailer’s adjusted quarterly earnings are projected to soar over 37% to hit $0.96 per share.
Bottom Line
Kohl's is currently a Zacks Rank #2 (Buy) that sports “A” grades for Value, Growth, and Momentum in our Style Scores system. The company has received a good chunk of upward earnings estimate revisions for its current fiscal year and the following year, while its Q3 trends have been more mixed.
TJX rocks “A's” for both Growth and Value and is also currently a Zacks Rank #2 (Buy), based on recent positive upward earnings estimate revision activity for both Q3 and its current fiscal year.
Both companies also pay dividends, which makes declaring a winner in this situation more difficult. Therefore, it seems like either stock might be worth thinking about at the moment, although KSS stock presents better value.
The two retailers are both scheduled to release their Q3 financial results before the opening bell on Tuesday.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>