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Category: Stock Market and TJX Companies
Date: 20 November 2019 Stock Price: $59.40 We take a look at the 3rd quarter 2019 earnings report of TJX companies, off-price apparel and home fashions retailer, with quarterly net sales topping $10.5 billion in their latest quarter.
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About TJX Companies
The TJX Companies, Inc. is the leading off-price apparel and home fashions retailer in the U.S. and worldwide. We believe that our retail business model is one of the most flexible in the world and that we have one of the widest demographic reaches in retail, both of which have enabled us to achieve successful, profitable growth, through many types of economic and retail cycles across different geographies. In our history as a Company, our annual comparable store sales have declined only once, and we have delivered solid earnings growth and strong financial returns. We are one of the few large U.S. retailers of apparel and home fashions to have expanded successfully internationally. We operate stores in nine countries across three continents, and we continue to believe we have exciting growth opportunities both in the U.S. and internationally. Our strong operations have consistently generated large amounts of cash annually, which has allowed us to invest in the growth of the business, while simultaneously returning value to shareholders
Overview of TJX's 3rd quarter 2020 earnings report
The data refers to the latest quarter unless specified otherwise
- Net sales: $10.45 billion (up from $9.825 billion for the same quarter of the previous year)
- Total revenues increased by 6.4% over the last 12 months
- Cost of sales: $7.440 billion (up from $6.983billion for the same quarter of the previous year)
- Cost of sales increased by 6.5% over the last 12 months
- Net earnings: $828.263 million (up from $762.253 million for the same quarter of the previous year)
- Diluted earnings per share: $0.68 (up from $0.61 for the same quarter of the previous year)
- PE ratio of TJX Companies: 23.9
- Dividend declared: $0.23
- Dividend yield of TJX Companies: 1.55%
- Dividend yield of TJX Companies: 1.55%
- Diluted shares in issue: 1.224 billion (down -2.6% from 1.257 million for the same quarter of the previous year)
- Cash and cash equivalents: $2.060 billion
- Cash and equivalents per share: $1.68
- Cash and equivalents makes up 2.8% of TJX Companies' market capital
- Cash and equivalents makes up 8.5% of TJX Companies' total assets
- Accounts receivable: $1.039 billion
- Accounts receivable makes up 4.3% of TJX Companies' total assets
- Merchandise inventories: $6.274 billion
- Merchandise inventories makes up 25.8% of TJX Companies' total assets
- Stockholders in TJX Companies: $5.542 billion
- Stockholders equity per share: $4.52
- TJX Companies is trading at 13.1 times its stockholders equity per share which is well outside the expected range of between 2 and 4 times that most firms tend to trade at
- Cash generated from operations (for the 3 quarters of fiscal 2019): $1.873 billion
- Cash generated from operations per share (for the 3 quarters of fiscal 2019): $1.53
TJX Companies' management commentary on their 3rd quarter 2019 earnings
FRAMINGHAM, Mass.--(BUSINESS WIRE)--Nov. 19, 2019-- The TJX Companies, Inc. (NYSE: TJX), the leading off-price apparel and home fashions retailer in the U.S. and worldwide, today announced sales and earnings results for the third quarter ended November 2, 2019. Net sales for the third quarter of Fiscal 2020 increased 6% to $10.5 billion. Consolidated comparable store sales increased 4%, over last year’s 7% increase. Net income for the third quarter was $828 million, and diluted earnings per share were $.68 versus $.61 in the prior year. This was an 8% increase versus the prior year’s adjusted $.63, which excluded a $.02 pension settlement charge.
Ernie Herrman, Chief Executive Officer and President of The TJX Companies, Inc., stated, “We are extremely pleased with our strong performance in the third quarter as both sales and earnings per share exceeded our expectations. Consolidated comp store sales increased 4% over a very strong 7% increase last year, and earnings per share were $.68. We are especially pleased that Marmaxx, HomeGoods, and TJX Canada each delivered a sequential increase in their comp store sales growth, and TJX International maintained its strong momentum driven by excellent performance in Europe. Further, customer traffic was the primary driver of the comp store sales increases at each of these four major divisions. With our above-guidance third quarter results, we are raising our full-year earnings per share guidance. Looking ahead, the fourth quarter is off to a solid start and we have many initiatives underway to keep driving traffic and sales to our stores and online during the holiday season and beyond. We are convinced our holiday marketing campaigns will position us as a top shopping destination for exciting gifts at amazing prices. We are seeing fantastic, widespread availability of quality, branded merchandise and are in a great position to capitalize on these opportunities. Longer term, we are confident that we can gain additional market share and continue the successful growth of TJX in the U.S. and internationally!”
Shareholder Distributions
During the third quarter, the Company returned a total of $778 million to shareholders. The Company repurchased a total of $500 million of TJX stock, retiring 9.0 million shares, and paid $278 million in shareholder dividends. For the first nine months of Fiscal 2020, the Company repurchased a total of $1.15 billion of TJX stock, retiring 21.3 million shares, and paid $795 million in shareholder dividends. The Company expects to repurchase $1.5 to $1.75 billion of TJX stock in Fiscal 2020. The Company may adjust this amount up or down depending on various factors.
Fourth Quarter and Full-Year Fiscal 2020 Outlook
For the fourth quarter of Fiscal 2020, the Company expects diluted earnings per share to be in the range of $.74 to $.76 versus earnings per share of $.68 in the prior year. This EPS outlook is based upon estimated comparable store sales growth of 2% to 3% on a consolidated basis and at Marmaxx. For the 52-week fiscal year ending February 1, 2020, the Company now expects diluted earnings per share to be in the range of $2.61 to $2.63. This would represent a 7% to 8% increase over the prior year’s $2.43, which included a $.02 negative impact from a pension settlement charge. The Company expects diluted earnings per share to increase 7% over the prior year’s adjusted $2.45, which excluded the pension settlement charge. This EPS outlook is based upon estimated comparable store sales growth of 3% on a consolidated basis and 3% to 4% at Marmaxx.
The Company’s earnings guidance for the fourth quarter and full-year Fiscal 2020 assumes that currency exchange rates will remain unchanged from the levels at the beginning of the fourth quarter.
Shareholder Distributions
During the third quarter, the Company returned a total of $778 million to shareholders. The Company repurchased a total of $500 million of TJX stock, retiring 9.0 million shares, and paid $278 million in shareholder dividends. For the first nine months of Fiscal 2020, the Company repurchased a total of $1.15 billion of TJX stock, retiring 21.3 million shares, and paid $795 million in shareholder dividends. The Company expects to repurchase $1.5 to $1.75 billion of TJX stock in Fiscal 2020. The Company may adjust this amount up or down depending on various factors.
Fourth Quarter and Full-Year Fiscal 2020 Outlook
For the fourth quarter of Fiscal 2020, the Company expects diluted earnings per share to be in the range of $.74 to $.76 versus earnings per share of $.68 in the prior year. This EPS outlook is based upon estimated comparable store sales growth of 2% to 3% on a consolidated basis and at Marmaxx. For the 52-week fiscal year ending February 1, 2020, the Company now expects diluted earnings per share to be in the range of $2.61 to $2.63. This would represent a 7% to 8% increase over the prior year’s $2.43, which included a $.02 negative impact from a pension settlement charge. The Company expects diluted earnings per share to increase 7% over the prior year’s adjusted $2.45, which excluded the pension settlement charge. This EPS outlook is based upon estimated comparable store sales growth of 3% on a consolidated basis and 3% to 4% at Marmaxx.
The Company’s earnings guidance for the fourth quarter and full-year Fiscal 2020 assumes that currency exchange rates will remain unchanged from the levels at the beginning of the fourth quarter.
TJX Companies (NYSE: TJX) stock price history
The image below, obtained from Google shows the stock price history of TJX companies (NYSE: TJX) for the last 5 years and it's been a very good time for TJX stockholders over the last 5 years. 5 years ago the stock was trading at $31.80 and its currently trading at $59.42. That's a very strong return of 86.9% provided to TJX stockholders over the last 5 years. The stock of TJX is trading at closer to its 52 week high of $61.69 than it is to its 52 week low of $41.49 which to us is a clear indication that the short term sentiment and momentum of TJX stock is very positive at this point in time.
Recent coverage of TJX Companies
The extract below covers the latest regarding TJX Companies as obtained from TheStreet.com.
Shares of discount retail clothing chain TJX Cos. (TJX - Get Report) rose on Tuesday after the company bucked the trend of weak retail reports with quarterly sales and earnings numbers that beat analysts' forecasts. The Framingham, Mass.-based company posted fiscal third-quarter earnings of $828.3 million, or 68 cents a share, vs. $739.6 million, or 63 cents a share, in the year-ago. Analysts polled by FactSet had been expecting earnings of 66 cents a share.
Sales came in at $10.45 billion, above sales of $9.8 billion a year ago and above analysts' estimates of $10.32 billion. Same-store sales, a key metric in retail, gained 4% during the quarter, the company said. The figures buck the trend of other retailers including rival Kohl's (KSS - Get Report) which have reported weaker-than-expected third-quarter results. Lowe's (LOW - Get Report) will release its quarterly results before the market open on Wednesday while Macy's (M - Get Report) will report third-quarter numbers later this week.
They also come as retailers of all stripes report mixed results, in particular Home Depot (HD - Get Report) , which on Tuesday announced a decent quarter but warned its full-year sales and earnings numbers would likely come in soft.
Read the full article here
Shares of discount retail clothing chain TJX Cos. (TJX - Get Report) rose on Tuesday after the company bucked the trend of weak retail reports with quarterly sales and earnings numbers that beat analysts' forecasts. The Framingham, Mass.-based company posted fiscal third-quarter earnings of $828.3 million, or 68 cents a share, vs. $739.6 million, or 63 cents a share, in the year-ago. Analysts polled by FactSet had been expecting earnings of 66 cents a share.
Sales came in at $10.45 billion, above sales of $9.8 billion a year ago and above analysts' estimates of $10.32 billion. Same-store sales, a key metric in retail, gained 4% during the quarter, the company said. The figures buck the trend of other retailers including rival Kohl's (KSS - Get Report) which have reported weaker-than-expected third-quarter results. Lowe's (LOW - Get Report) will release its quarterly results before the market open on Wednesday while Macy's (M - Get Report) will report third-quarter numbers later this week.
They also come as retailers of all stripes report mixed results, in particular Home Depot (HD - Get Report) , which on Tuesday announced a decent quarter but warned its full-year sales and earnings numbers would likely come in soft.
Read the full article here
TJX Companies (NYSE: TJX) latest stock valuation
So what is TJX Companies stock worth based on their 3rd quarter 2019 earnings report and their earnings guidance provided? Based on their earnings report and the fiscal guidance provided our valuation model provides a target (full value) price for TJX Companies at $49.80 a stock. We therefore believe the stock of TJX Companies is overvalued
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target (full value) price, which in this case is $49.80, thus a good entry point into TJX Companies would be at $44.80 or below.
We expect the stock of TJX Companies to pull back strongly from current levels in coming weeks and months to levels closer to our target (full value) price. Since the stock of TJX Companies is trading at well above our suggested entry point and target (full value) price we rate the stock of TJX Companies as a sell
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target (full value) price, which in this case is $49.80, thus a good entry point into TJX Companies would be at $44.80 or below.
We expect the stock of TJX Companies to pull back strongly from current levels in coming weeks and months to levels closer to our target (full value) price. Since the stock of TJX Companies is trading at well above our suggested entry point and target (full value) price we rate the stock of TJX Companies as a sell
Next earnings release for TJX Companies
It is expected that TJX Companies the will release their 4th quarter and full fiscal 2020 earnings report in late February 2020