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TJX Companies Seen Fairly Valued in Tough Times

By    |   Monday, 30 Jul 2012 11:03 PM

TJX Companies (TJX) is the kind of retailer likely to prosper in tough times, a nimble discounter whose customers know how to pinch pennies when necessary. The slow economy may have helped TJX a touch too much, however, as analysts see it fairly valued at recent prices.

TJX Companies is an off-price apparel and home fashions retailer in the United States and worldwide. Its 2,900 stores offer a rapidly changing assortment of quality, fashionable, brand-name and designer merchandise at prices generally 20 percent to 60 percent below department and specialty store regular prices, every day.

The company operates apparel and home fashions off-price retail chains which are known for their treasure hunt shopping experience and excellent values on fashionable, brand-name merchandise within four major divisions: the Marmaxx Group and HomeGoods in the U.S., TJX Canada and TJX Europe.

Inventories turn rapidly in the stores relative to traditional retailers to create a sense of urgency and excitement for our customers which encourages frequent customer visits, management said in a recent filing

“With our flexible ‘no walls’ business model, we can quickly expand and contract merchandise categories in response to consumers’ changing tastes and market conditions. Although our stores primarily target the middle to upper middle income customer, we reach a broad range of customers across many demographic groups and income levels with the values we offer.”

TJX Companies has a market cap of $33.12 billion in a sector, specialty retail, where the average company size is $6.03 billion. Its trailing 12-month P/E ratio is 20.79 and its five-year projected price-to-earnings-growth (PEG) ratio is 1.66, compared to 1.33 for the sector.

Its projected earnings per share growth for the coming year is 11.48 percent, compared to a sector average of 15.90 percent.

Valuation


Analysts are positive on TJX, with buy or outperform calls from Avondale Partners, Deutsche Bank, Friedman, Billings, Ramsey & Co., Jefferson Research, UBS and Ned Davis Research.

“Our hold recommendation is based on valuation,” Standard & Poor’s analysts wrote on May 16.

“Through frequent inflow of new assortments, we see TJX successfully engaging customers in a competitive retail environment.We also think the conversion of former A.J.Wright stores to the T.J. Maxx and Marshalls banners in FY‘12 has widened the demographic reach of the company's core Marmaxx division.”

TJX Companies next reports on Aug 14.

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2012-03-30
Monday, 30 Jul 2012 11:03 PM
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