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Is TJX stock trading at a discount or at a premium?
TJX Companies Inc (NYSE:TJX) is an off-price retailer of apparel and home fashions in the U.S. and worldwide. TJX stores operate under the T.J. Maxx, T.K. Maxx, Marshalls, HomeGoods, Sierra, Winners, and Homesense brands names.
TJX is preparing for its first-quarter earnings report, due out on Wednesday, May 18. Most recently, TJX reported an EPS (earnings per share) of $0.78 for its fourth quarter of fiscal 2022. Wall Street is expecting a drop in earnings reported for its first quarter, down to $0.61 per share in its upcoming earnings report.
The stock has seen a mixed post-earnings response during the past two years, enjoying positive next-day returns half the time, and averaging a swing of 4.4%, regardless of direction. This time around, the options pits are pricing in a 7.6% move for the following session.
Analysts are incredibly bullish on the stock ahead of the event. Of the 16 in coverage, 13 say "strong buy." Plus, its 12-month consensus price target of $77.76 is a solid 31.5% premium to last night's close.
The stock has lost 22% in 2022, and has shed nearly 19% in the past 12 months. The equity managed to briefly break out past a recent ceiling at the $64 level in mid-April, though this rally was swiftly rejected by the 120-day moving average. On the other hand, the $59 level has helped contain some of this volatile price action.
TJX Companies offers a decent dividend yield of 2.00% with forward dividend of $1.18. The retailer also reported a 51.1% increase in revenues and a 3,528.6% increase in net income for fiscal 2022, signaling a strong recovery after the company reported a 23% decrease in revenues and a 97.3% decrease in net income for fiscal 2021. In addition, TJX is estimated to grow revenues by 8.8% and earnings by 10.9% for fiscal 2023, as well as increase revenues by 5.9% and earnings by 13.6% for fiscal 2024.
However, TJX stock trades at a forward price-earnings ratio of 19.30 and a price-sales ratio of 1.55, which are relatively high figures considering the business’ top- and bottom-line growth rates. Moreover, the retailer also hold $6.23 billion in cash and $12.51 billion in total debt. Overall, TJX stock continues to be somewhat overvalued due to the business’s slow growth rate and weak balance sheet.