Is TJ Maxx Stock a Good Pre-Earnings Recovery Play?

The TJX Companies’ numbers show a promising rate of recovery

Aug 16, 2021 at 10:58 AM
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The TJX Companies, Inc. (NYSE:TJX) is an off-price retailer of apparel and home fashions in the U.S. and around the world. The fashion retailer operates a total of 4,639 stores in the United States, Canada, the United Kingdom, Ireland, Germany, Poland, Austria, the Netherlands, and Australia. TJX's stores operate under brand names such as TJ Maxx, TK Maxx, Marshalls, HomeGoods, Sierra, and Homesense. This afternoon, TJX is trading down. 0.7% at $69.99.

Earlier this month, The TJX Companies announced plans to release its fiscal third-quarter earnings on Wednesday, August 18 before market hours. In recent history, TJX has outperformed Wall Street's earnings expectations on two of the last four quarterly earnings reports released. Analysts currently anticipate that TJX will produce earnings of $0.57 per share.

For its fiscal third-quarter earnings last year, TJX beat analysts’ estimates by a margin of $0.08, reporting an EPS of -$0.18. For Q4, the parent of TJ Maxx posted an increased EPS up to $0.71, beating expectations by a margin of $0.31.For Q1 this year, TJX posted a decrease in earnings, dropping to $0.50 per share and also missed estimates by a margin of $0.12. For Q2, TJX Companies reported an EPS of $0.44 and beat expectations by a margin of $0.13.

TJX Companies stock has increased by approximately 22% in price year-over-year and 41% since bottoming at a more than two-year low of $50.06 at the end of October. Additionally, shares of TJX have grown 6% year-to-date. However, TJX is down by 6% since reaching a record peak of $74.65 in May. Moreover, TJX Companies offers a forward dividend of $1.04 and a dividend yield 1.48%.

From a fundamental perspective, TJX Companies has a fairly expensive valuation. TJX currently trades at a very high price-earnings ratio of 57.03 as a result of the company experiencing massive revenue and net income declines during the peak of the pandemic.

The TJX Companies' revenues dropped 12%in 2020, giving the fashion company plenty of upside potential. In addition, TJX Companies stock has a forward price-earnings ratio of 26.88, which is still fairly high but represents a big initial improvement, making TJX Companies stock a promising recovery play for long-term investors.

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