Back to top

Analyst Blog

Zacks Equity Research

TJX Companies (TJX) Q3 Earnings: What's in the Cards?

FL TJX RUTH HIBB

Trades from $3

The TJX Companies Inc. (TJX - Free Report) is set to report third-quarter fiscal 2016 results on Nov 15, before the opening bell. Last quarter, the company posted a positive earnings surprise of 5.00%.

The company posted positive surprises in all of the previous four quarters, with an average surprise of 5.32%. Let's see how things are shaping up prior to this announcement.

Factors to Consider

TJX Companies has been posting modest earnings and revenue growth over the past few quarters backed by improvement in consumer traffic, higher margins and solid comparable-store sales growth.

TJX COS INC NEW Price and EPS Surprise

 

TJX COS INC NEW Price and EPS Surprise | TJX COS INC NEW Quote

The company has been reporting positive comps growth over the past 29 quarters supported by higher traffic. Its fresh collection and widespread sourcing machinery has helped it maintain a loyal customer base. The trend is anticipated to continue in the to-be-reported quarter as well.

However, the company is expected to witness a dip in margins due to higher wages paid to laborers as announced earlier in fiscal 2016. Moreover, foreign exchange headwind due to weakening of many currencies against the U.S. dollar is expected to affect the fiscal first-quarter revenues.

Based on the guidance issued during second-quarter fiscal 2016 conference call, TJX anticipates earnings in the range of 83–85 cents compared with 86 cents reported a year ago. Comparable-store sales are expected to grow 2–3%.

Earnings Whispers

Our proven model does not conclusively show that TJX is likely to beat earnings this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to surpass earnings estimates. However, that is not the case here as you will see below:

Zacks ESP: Earnings ESP for TJX is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 87 cents. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Zacks Rank: TJX currently has a Zacks Rank #3 . However, a 0.00% Earnings ESP makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Some stocks in the retail companies that have both a positive Earnings ESP and a favorable Zacks Rank are:

Foot Locker Inc. (FL - Free Report) with an Earnings ESP of +0.91% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Hibbet Sports Inc. (HIBB - Free Report) with an Earnings ESP of +4.00% and a Zacks Rank #2.

Ruth Hospitality Group Inc. (RUTH - Free Report) with an Earnings ESP of +6.90% and a Zacks Rank #2.

The Best Place to Start Your Stock Search

Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>

Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »