The TJX Companies, Inc. (NYSE: TJX)
It has already been a good few years for shares of The TJX Companies, Inc. Shares of the group that includes T.J. Maxx, Marshalls, HomeGoods, and Sierra Trading Post have nearly quadrupled in the last five years. The company’s earnings announcement on Tuesday added more fuel to the fire that has been sending the stock higher.
The TJX Companies, Inc. Announce a Beat and Raise
It may be a bad sign of the overall economy that TJX and its bargain brand stores are doing well, but TJX shareholders will certainly take the win. Discount retailers have been beating the rest of the retail market recently, suggesting shoppers are remaining cost-conscious in current market conditions. TJX earnings for the second quarter rose 6.1% over last year’s numbers and the stock rose 7.2% on Tuesday as a result. Sales at U.S. locations of T.J. Maxx and Marshalls increased 4% when analysts only expected an increase of 2.9%. Sales at HomeGoods increased 9% when analysts were only expecting a 4.8% increase. Gross margins improved half a percent from 28.6% to 29.1%. Earnings per share estimates and sales growth estimates for the year were also raised as a result of the solid second quarter numbers. Expectations for sales growth of 2-3% and EPS of $3.21-$3.27 have now been revised up to 3-4% sales growth and $3.24-$3.28 EPS.
The Last Few Years for TJX
To put all of these numbers into perspective, let’s take a look at the business that TJX has been building in the past few years. At the end of 2010, share prices were trading in the $20 to $24 range. Right around that time, TJX announced a bit of a restructuring. They announced that they would be eliminating their AJ Wright line of discount stores and cutting 4,400 jobs in the process. A few months later in February of 2011, TJX announced the promotion of veteran Ernie Herrman to the role of president to assist CEO Carol Meyrowitz with day-to-day duties. In February of 2011, share prices broke through the $25 barrier and have really never looked back. At the end of 2012, the company bought the internet bargain retailer Sierra Trading Post for $200 million as a beginning of its foray into the e-commerce space. Nine months later, TJX was officially launching its own e-commerce venture (undoubtedly with expertise acquired through the Sierra Trading Post deal) by re-launching T.J. Maxx’s online store after a six year hiatus. Shares struggled through the first half of 2014 but they have since recovered and now broken out higher because of Tuesday’s earnings results.
Technical Analysis
With TJX setting new all-time highs on Thursday, Monday, and again on Tuesday, there is no precise overheard resistance. The previous all-time high was $71.03 set on March 30th of this year. That previous all-time high resistance level may now become a support level. Below that, support remains in the stock’s previous range of $69 to $64 where share prices remained from December through August. The relatively high P/E ratio of over 22 may temper some bullish investors on the stock, but the company’s strong and consistent growth might be enough to overcome reservations.
Company Profile
The TJX Companies, Inc. is an American off-price department store retailer. With US nameplates such as T.J. Maxx, Marshalls, HomeGoods, and Sierra Trading Post, it claims to be the largest off-price department store chain in the country. International retail nameplates like Winners, T.K. Maxx, HomeSense, Home Secret, and Trade Secret also fall under the company’s umbrella. TJX is based in Framingham, Massachusetts.
