The TJX Companies, Inc. (TJX - Get Rating), an international off-price apparel and home fashions retailer, beat third-quarter top and bottom-line analyst expectations. The company posted net sales of $14.06 billion, surpassing the consensus estimate of $13.95 billion. Also, its EPS was $1.14 for the third quarter, compared to analysts’ expectations of $1.10.

TJX Companies marked significant milestones during the third quarter. Its consolidated comparable store sales increased by 3%, driven by an increase in customer transactions. Also, the company successfully completed its investment in the joint venture with Grupo Axo and paid $423 million as shareholder dividends during the quarter.

Further, recently TJX completed its investment in Brands For Less and is working on its plans to enter Spain with its TK Maxx banner in early 2026.

Amid the solid economic growth, easing inflation, and lower borrowing costs, consumers’ confidence is increasing, resulting in an upward trend in their spending capacity. The rising number of affluent consumers, inflating income levels, growing aspiration for exclusivity and uniqueness, and rapid globalization are further propelling the luxury fashion market.

IMARC Group expects the global luxury fashion market to reach around $327.10 billion by 2032, exhibiting a CAGR of 3.1%. TJX Companies stands at the forefront owing to its expanding operations and capabilities in the retail sector and strategic investments. TJX is well-positioned to benefit from the market’s current trends and growth prospects.

The company’s impressive stock growth over the past year highlights its potential as an investment. The stock gained 24.4% in the past six months and a notable 41.6% over the last year, closing its last trading session at $126.20.

Let’s look at factors that could influence TJX’s performance in the upcoming months.

Recent Developments

On June 7, TJX entered into a definitive agreement for a joint venture with Grupo Axo, S.A.P.I. de C.V., an operator of global brands in Mexico and South America. Under the agreement, TJX owns 49% of the joint venture and Axo owns 51% of the joint venture. The agreement comprises Axo’s off-price physical store business in Mexico, which includes over 200 stores.

The strategic collaboration with Axo expanded TJX’s operations in Mexico and extended the opportunity to grow and enhance the country’s leading off-price retailer.

Robust Financials

For the third quarter that ended November 2, 2024, TJX’s net sales increased 6% year-over-year to $14.06 billion. Its total segment profit grew 10.2% from the year-ago value to $1.84 billion. The company’s income before income taxes of $1.74 billion indicates growth of 9.3% from the prior-year quarter.

Furthermore, the company’s net income and EPS came in at $1.30 billion and $1.14, up 8.9% and 10.7% from the prior year’s quarter, respectively.

As of November 2, 2024, TJX’s total assets stood at $32.44 billion, compared to $30.35 billion as of October 28, 2023.

Solid Historical Growth

TJX’s revenue grew at a CAGR of 7.3% over the past three years, while its EBITDA improved at a CAGR of 15.7%. Its EBIT increased at a CAGR of 17.5% over the same period, while the company’s net income and EPS grew at CAGRs of 22.2% and 25.1% over the same time frame, respectively.

Furthermore, the company’s tangible book value and levered free cash flow have grown at respective CAGRs of 8.4% and 48.8%.

Favorable Analyst Estimates

Analysts expect TJX’s revenue for the first quarter (ending April 2025) to come in at $13.19 billion, indicating an increase of 5.7% year-over-year. The consensus EPS estimate of $0.99 for the same period represents a 6.8% year-over-year improvement. Moreover, the company has surpassed the consensus revenue and EPS estimates in each of the trailing four quarters, which is remarkable.

For the fiscal year (ending January 2025), the company’s revenue and EPS are anticipated to grow 3.7% and 8.6% year-over-year to $56.21 billion and $4.19, respectively. In addition, Street expects its revenue and EPS for the fiscal year 2026 to grow 5.7% and 9.9% from the prior year to $59.42 billion and $4.60, respectively.

Strong Profitability

TJX’s trailing-12-month EBIT margin of 11.07% is 37.8% higher than the 8.03% industry average. The stock’s trailing-12-month net income margin of 8.63% is 97.5% higher than the industry average of 4.37%. And the stock’s trailing-12-month levered FCF margin of 6.26% is 33.8% higher than the 4.67% industry average.

Furthermore, the stock’s ROCE, ROTC, and ROTA of 64.89%, 19.40%, and 15.01% are favorable compared to the 10.61%, 6.14%, and 3.91% industry averages, respectively.

POWR Ratings Reflects Optimism

TJX’s robust fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, translating to a Buy in our proprietary system. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. TJX has a B grade for Quality and Sentiment, which is justified by its higher-than-average profitability metrics and optimistic analyst estimates.

Also, the stock has a B grade for Momentum. TJX is trading above its 50-day and 200-day moving averages of $116.62 and $107.92, respectively, indicating an uptrend.

TJX is ranked #15 among the 60 stocks in the B-rated Fashion & Luxury industry.

Beyond what is stated above, we have also given TJX grades for Stability, Growth, and Value. Get access to all the TJX ratings here.

Bottom Line

TJX reported better-than-expected earnings in the third quarter of fiscal 2025. Further, the company’s long-term prospects are fueled by its diverse product offerings, strategic partnerships and investments, and expansion in new territories.

Also, the company’s solid sales growth, robust industry footing, and optimistic profitability have positioned it for continued growth. Owing to its consistent track record of profitability, the company is well-positioned to capitalize on the growing demand for luxury fashion, further enhancing its competitive edge.

Given TJX’s high profitability and its strategic position in the retail industry, it could be an attractive buy for investors seeking growth potential.

How Does The TJX Companies, Inc. (TJX) Stack Up Against Its Peers?

While TJX’s near-term outlook appears sound having an overall B rating, it may be worthwhile to explore its industry peers, who currently exhibit even stronger POWR Ratings. So, consider these three A (Strong Buy) or B-rated (Buy) stocks from the B-rated Fashion & Luxury industry: Hugo Boss AG (BOSSY - Get Rating), Weyco Group, Inc. (WEYS - Get Rating), and H&M Hennes & Mauritz AB ADR (HNNMY - Get Rating).

For exploring more A and B-rated fashion & luxury stocks, click here.

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TJX shares were trading at $126.39 per share on Wednesday afternoon, up $0.19 (+0.15%). Year-to-date, TJX has gained 36.59%, versus a 27.18% rise in the benchmark S&P 500 index during the same period.

About the Author: Rjkumari Saxena

Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions. More...

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