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Factors Likely to Impact TJX Companies (TJX) in Q3 Earnings

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The TJX Companies, Inc. (TJX - Free Report) is slated to report third-quarter fiscal 2018 results on Nov 14, before the opening bell.

We note that this leading off-price retailer’s earnings have outpaced the Zacks Consensus Estimate for 11 straight quarters, with a trailing four-quarter average beat of 3.2%.

Let’s now look into some factors that are likely to impact third-quarter results.

What to Expect?

The Zacks Consensus Estimate for the third quarter has been stable in the past 30 days at $1.00. Further, estimated earnings depict a year-on-year growth of 9.9%. Moreover, analysts polled by Zacks expect revenues of $8,885 million for the said quarter, reflecting an improvement of 7.2% from the prior-year period.

Factors Influencing the Quarter

Higher store traffic has been benefiting TJX Companies’ comps for the last 33 quarters.  In order to maintain sales momentum in stores, the company has been adhering to aggressive store openings and brand-enhancing initiatives. Evidently, TJX Companies plans to open approximately 260 stores during the third and fourth quarters of fiscal 2018. Further, the company’s HomeSense store concept (launched during the second quarter) is expected to aid comps this season.

In order to support store traffic growth, TJX Companies has been undertaking strategic marketing and advertising campaigns. Its gift-giving initiatives and loyalty card program have aided improved customer engagement. TJX Companies has also been ramping up e-commerce business and plans to add more categories to the online shopping site.

The company is aiming to invest categorically to differentiate e-commerce business from its brick-and-mortar stores. Such efforts are likely to augment TJX Companies’ business and thereby benefit top-line performance in the to-be-reported quarter.

TJX Companies, Inc. (The) Price, Consensus and EPS Surprise

However, the company has been struggling with rising costs and expects pre-tax margins to be under pressure during the third quarter, thanks to an increase in employee payroll. Further, the company expects incremental investments, additional supply chain costs and pension costs to dent performance. So let’s see if TJX Companies’ growth endeavors can counter these hurdles in the third quarter.

What Does the Zacks Model Unveil?

Our proven model does not conclusively show that TJX Companies is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.

Although TJX Companies carries a Zacks Rank #2 its Earnings ESP of -1.20% makes surprise prediction difficult.

Stocks with Favorable Combinations

Here are some companies which, according to our model, have the right combination of elements to deliver earnings beat.

Zumiez Inc. (ZUMZ - Free Report) has an Earnings ESP of +0.69% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ross Stores Inc. (ROST - Free Report) has an Earnings ESP of +0.27% and a Zacks Rank #2.

Home Depot Inc. (HD - Free Report) has an Earnings ESP of +0.76% and a Zacks Rank #2.

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