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TJX Companies Inc TJX

Rating as of

Morningstar’s Analysis

Valuation
Currency in USD
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Stewardship

PREMIUM

Third-Quarter Sales Ahead of Our Targets, but TJX’s Near-Term Performance Should Remain Volatile

Zain Akbari, CFA Equity Analyst

Analyst Note

| Zain Akbari, CFA |

Our $50 per share valuation for narrow-moat TJX should not see a large change after it reported third-quarter earnings that beat our expectations but faces considerable uncertainty in the year’s final stanza as COVID-19 case counts rise and threaten renewed local store closures. The uncertainty leads us to suggest investors await a more attractive entry point, despite our favorable view of TJX’s long-term potential (mid-single-digit percentage sales growth, low-double-digit adjusted operating margins expected over the next 10 years, on average).

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Company Profile

Business Description

TJX is a leading off-price retailer of apparel, home fashions, and other merchandise. It sells a variety of branded goods, opportunistically buying inventory from a network of over 21,000 vendors worldwide. TJX targets undercutting conventional retailers' regular prices by 20%-60%, capitalizing on a flexible merchandising network, relatively low-frills stores, and a treasure-hunt shopping experience to drive margins and inventory turnover. TJX derived 76% of fiscal 2020 revenue from the United States, with 13% from Europe (mostly the United Kingdom and Germany), 10% from Canada, and the remainder from Australia. The company operated 4,529 stores at the end of fiscal 2020 under the T.J. Maxx, T.K. Maxx, Marshalls, HomeGoods, Winners, Homesense, Winners, and Sierra banners.

Contact
770 Cochituate Road
Framingham, MA, 01701
T +1 508 390-1000
Sector Consumer Cyclical
Industry Apparel Retail
Most Recent Earnings Jul 31, 2020
Fiscal Year End Feb 1, 2021
Stock Type Cyclical
Employees 286,000

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