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Will Strong Comps Aid TJX Companies (TJX) in Q1 Earnings?

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The TJX Companies, Inc. (TJX - Free Report) is slated to release first-quarter fiscal 2020 results on May 21. In the last reported quarter, the bottom line missed the Zacks Consensus Estimate by nearly 13.2%. Let’s discuss the factors that are likely to make an impact on the upcoming quarterly results.

Which Way are Estimates Heading?

The Zacks Consensus Estimate for first-quarter earnings is pegged at 55 cents, which suggests a decline of almost 3.5% from the prior-year quarter’s reported figure. The current estimate has been stable in the past 30 days.

Nevertheless, the consensus mark for revenues is pegged at $9,194 million, calling for a rise of approximately 5.8% from the year-ago quarter’s figure.

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

 

 

Comps & Inventory Position Boosts Hope

Persistent growth in comparable store sales (comps) has been adding cheer to TJX Companies. Comps primarily benefit from sturdy performance at Marmaxx as well as HomeGoods, TJX Canada and TJX International segments. Strength in apparel and home businesses have also been a fueling factor. We expect robust consumer traffic across different banners as well as the company’s off-price fundamentals to remain as key upsides in the impending quarter.

Moreover, a solid inventory position aids the company to take advantage of opportunities in the market for branded merchandise and drives the top line. The company keeps expanding the store base across the United States, Europe and Canada, while also bolstering online presence. Effective marketing initiatives and loyalty program across brick-and-mortar and e-commerce channels are yielding results. We expect these factors to bear a positive impact in the quarter to be reported.

Higher Costs & Currency to Weigh on Earnings

On the flip side, we note that rising wage and freight costs are a worry for TJX Companies. In fact, management expects these costs combined with adverse currency fluctuations to dent earnings in the to-be-reported quarter.

Zacks Model

Our proven model shows that TJX Companies is likely to beat estimates in the first quarter. A stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can see the complete list of today’s Zacks #1 Rank stocks here.

TJX Companies’ Zacks Rank #2 combined with the Earnings ESP of +0.79% makes us reasonably confident about an earnings beat. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks Poised to Beat Earnings Estimates

Here are some more companies you may want to consider as our model shows that these also have the right combination of elements to beat estimates:

Target Corporation (TGT - Free Report) , a Zacks Rank #2 stock, has an Earnings ESP of +0.42%.

Ross Stores, Inc (ROST - Free Report) has an Earnings ESP of +0.77% and a Zacks Rank of 3.

Costco Wholesale Corporation (COST - Free Report) , a Zacks #3 Ranked company, has an Earnings ESP of +1.83%.

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