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TJX (TJX) Up 1.8% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for TJX (TJX - Free Report) . Shares have added about 1.8% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is TJX due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
The TJX Companies Raises FY24 View on Q3 Earnings Beat
The TJX Companies posted solid third-quarter fiscal 2024 results, as both the top and bottom lines increased year over year and beat the Zacks Consensus Estimate. Encouragingly, management raised its overall comp store sales and earnings per share (EPS) guidance for fiscal 2024.
The company remains particularly impressed with the performance of the Marmaxx and HomeGoods segments, wherein the splendid comp sales growth was completely attributed to customer traffic. TJX Companies saw increased traffic in all segments, with apparel and home sales coming strong. The company started the fourth quarter of fiscal 2024 on a solid note and remains well-positioned for the crucial holiday season.
Quarter in Detail
TJX Companies’ earnings came in at $1.03, rising 13% year over year and up 20% from the year-ago period’s adjusted EPS figure. The third-quarter EPS included a 3-cent adverse effect of the closure of the HomeGoods e-commerce business and a 3-cent unplanned gain from the timing of some costs. The Zacks Consensus Estimate was pegged at 97 cents. Foreign currency movements had a 2-cent positive effect on EPS.
Net sales came in at $13,265 million, up 9% year over year (up 8% at constant currency or cc). The metric surpassed the Zacks Consensus Estimate of $13,052 million. Foreign currency movements had a 1-percentage point positive effect on net sales growth.
In the Marmaxx (U.S.) division, the company’s net sales came in at $8,107 million, up 9% year over year. Net sales amounted to $2,208 million, up 13% year over year, in the HomeGoods (U.S.) division. TJX Canada’s net sales came in at $1,317 million, up 2% from the figure reported in the year-ago period. TJX International’s (Europe & Australia) net sales were $1,633 million, up 10% year over year.
The company witnessed a 6% jump in overall comp store sales. We had expected a comp store sales growth of 3%. Comp store sales rose 7% at Marmaxx (U.S.) while increasing 9% at HomeGoods (U.S.). Comp store sales increased 3% and 1%, respectively, at TJX Canada and TJX International (Europe & Australia).
The pretax profit margin was 12%, up 0.8 percentage points from the year-ago quarter’s level. The upside can be attributed to expense leverage and the favorable timing of certain costs. We had expected a pretax profit margin of 11.4%.
The gross profit margin came in at 31.1%, up 2 percentage points due to the increased merchandise margin. We had expected a 1.3-percentage point increase in the gross profit margin to 30.4%.
SG&A costs as a percent of sales was 19.4%, up 1.4 percentage points. The rise in such costs can be attributed to increased incentive compensation accruals, incremental store wages and payroll costs and costs associated with the closing of HomeGoods’ e-commerce business.
Other Updates
During the quarter, the company added 50 new stores, ending the quarter with 4,934 stores. TJX Companies ended the quarter with cash of $4,290 million, long-term debt of $2,861 million and shareholders’ equity of $6,833 million. The company generated an operating cash flow of $1.2 billion in the third quarter of fiscal 2024.
During the quarter, management returned $1 billion to shareholders. TJX repurchased $650 million in stock, retiring 7.2 million shares. The company paid out $380 million in shareholder dividends. In the first nine months of fiscal 2024, TJX returned $2.8 billion to shareholders, including share buybacks worth $1.7 billion and dividend payments of $1.1 billion. Management plans to repurchase shares worth $2.25-$2.5 billion in the fiscal year ending Feb 3, 2024.
As of Oct 28, 2023, total inventories were $8.3 billion. Management is optimistic about its capabilities to offer impressive branded merchandise at its stores and online during the holiday season.
Guidance
For fiscal 2024, TJX Companies now expects an overall comparable store sales increase of 4-5%, up from the prior view of 3-4% growth. Management expects the fiscal 2024 adjusted pretax profit margin of nearly 10.7% compared with the earlier view of 10.6-10.7%. The reported pretax profit margin is expected at roughly 10.8% now compared with the 10.7-10.8% expected earlier.
For fiscal 2024, management now envisions the adjusted EPS in the $3.61-$3.64 range and a reported EPS of $3.71 to $3.74. It earlier expected the adjusted EPS in the band of $3.56-$3.62 and the reported EPS in the range of $3.66-$3.72.
For the fourth quarter of fiscal 2024, the company is projecting overall comparable store sales growth of 3-4%. For the quarter, management anticipates an adjusted pretax profit margin in the range of 10-10.2% and an EPS between 97 cents and $1.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, TJX has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, TJX has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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TJX (TJX) Up 1.8% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for TJX (TJX - Free Report) . Shares have added about 1.8% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is TJX due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
The TJX Companies Raises FY24 View on Q3 Earnings Beat
The TJX Companies posted solid third-quarter fiscal 2024 results, as both the top and bottom lines increased year over year and beat the Zacks Consensus Estimate. Encouragingly, management raised its overall comp store sales and earnings per share (EPS) guidance for fiscal 2024.
The company remains particularly impressed with the performance of the Marmaxx and HomeGoods segments, wherein the splendid comp sales growth was completely attributed to customer traffic. TJX Companies saw increased traffic in all segments, with apparel and home sales coming strong. The company started the fourth quarter of fiscal 2024 on a solid note and remains well-positioned for the crucial holiday season.
Quarter in Detail
TJX Companies’ earnings came in at $1.03, rising 13% year over year and up 20% from the year-ago period’s adjusted EPS figure. The third-quarter EPS included a 3-cent adverse effect of the closure of the HomeGoods e-commerce business and a 3-cent unplanned gain from the timing of some costs. The Zacks Consensus Estimate was pegged at 97 cents. Foreign currency movements had a 2-cent positive effect on EPS.
Net sales came in at $13,265 million, up 9% year over year (up 8% at constant currency or cc). The metric surpassed the Zacks Consensus Estimate of $13,052 million. Foreign currency movements had a 1-percentage point positive effect on net sales growth.
In the Marmaxx (U.S.) division, the company’s net sales came in at $8,107 million, up 9% year over year. Net sales amounted to $2,208 million, up 13% year over year, in the HomeGoods (U.S.) division. TJX Canada’s net sales came in at $1,317 million, up 2% from the figure reported in the year-ago period. TJX International’s (Europe & Australia) net sales were $1,633 million, up 10% year over year.
The company witnessed a 6% jump in overall comp store sales. We had expected a comp store sales growth of 3%. Comp store sales rose 7% at Marmaxx (U.S.) while increasing 9% at HomeGoods (U.S.). Comp store sales increased 3% and 1%, respectively, at TJX Canada and TJX International (Europe & Australia).
The pretax profit margin was 12%, up 0.8 percentage points from the year-ago quarter’s level. The upside can be attributed to expense leverage and the favorable timing of certain costs. We had expected a pretax profit margin of 11.4%.
The gross profit margin came in at 31.1%, up 2 percentage points due to the increased merchandise margin. We had expected a 1.3-percentage point increase in the gross profit margin to 30.4%.
SG&A costs as a percent of sales was 19.4%, up 1.4 percentage points. The rise in such costs can be attributed to increased incentive compensation accruals, incremental store wages and payroll costs and costs associated with the closing of HomeGoods’ e-commerce business.
Other Updates
During the quarter, the company added 50 new stores, ending the quarter with 4,934 stores. TJX Companies ended the quarter with cash of $4,290 million, long-term debt of $2,861 million and shareholders’ equity of $6,833 million. The company generated an operating cash flow of $1.2 billion in the third quarter of fiscal 2024.
During the quarter, management returned $1 billion to shareholders. TJX repurchased $650 million in stock, retiring 7.2 million shares. The company paid out $380 million in shareholder dividends. In the first nine months of fiscal 2024, TJX returned $2.8 billion to shareholders, including share buybacks worth $1.7 billion and dividend payments of $1.1 billion. Management plans to repurchase shares worth $2.25-$2.5 billion in the fiscal year ending Feb 3, 2024.
As of Oct 28, 2023, total inventories were $8.3 billion. Management is optimistic about its capabilities to offer impressive branded merchandise at its stores and online during the holiday season.
Guidance
For fiscal 2024, TJX Companies now expects an overall comparable store sales increase of 4-5%, up from the prior view of 3-4% growth. Management expects the fiscal 2024 adjusted pretax profit margin of nearly 10.7% compared with the earlier view of 10.6-10.7%. The reported pretax profit margin is expected at roughly 10.8% now compared with the 10.7-10.8% expected earlier.
For fiscal 2024, management now envisions the adjusted EPS in the $3.61-$3.64 range and a reported EPS of $3.71 to $3.74. It earlier expected the adjusted EPS in the band of $3.56-$3.62 and the reported EPS in the range of $3.66-$3.72.
For the fourth quarter of fiscal 2024, the company is projecting overall comparable store sales growth of 3-4%. For the quarter, management anticipates an adjusted pretax profit margin in the range of 10-10.2% and an EPS between 97 cents and $1.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, TJX has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, TJX has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.