The TJX Cos., Inc. – Value Analysis (NYSE:TJX) : August 21, 2017

Capitalcube gives The TJX Cos., Inc. a score of 97.

Our analysis is based on comparing The TJX Cos., Inc. with the following peers – Ross Stores, Inc., Urban Outfitters, Inc., Gap, Inc., Nordstrom, Inc., Stein Mart, Inc., American Eagle Outfitters, Inc., Ascena Retail Group, Inc., Macy’s Inc, Target Corporation and Gordmans Stores, Inc. (ROST-US, URBN-US, GPS-US, JWN-US, SMRT-US, AEO-US, ASNA-US, M-US, TGT-US and GMANQ-US).

Investment Outlook

The TJX Cos., Inc. has a fundamental score of 97 and has a relative valuation of OVERVALUED.

Fundamental Score

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Company Overview

  • Considering peers, relative outperformance over the last year and the last month suggest a leading position.
  • It currently trades at a Price/Book ratio of (9.98).
  • TJX-US outperforms its peers with a relatively high operating performance and the market also expects faster growth relative to its peers
  • TJX-US has a successful operating model with relatively high net profit margins and asset turns.
  • The company’s year-on-year change in revenues and earnings are better than the median among its peer group.
  • TJX-US‘s return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
  • The company’s relatively high pre-tax margin suggests tight control on operating costs versus peers.
  • Compared with the peers chosen, TJX-US has had faster revenue growth in prior years and a current P/E ratio that suggests faster growth in the future suggesting superior growth expectations.
  • The company’s level of capital investment seems appropriate to support the company’s growth.
  • TJX-US has the financial and operating capacity to borrow quickly.

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Leverage & Liquidity

TJX-US has the financial and operating capacity to borrow quickly.

  • With debt at a relatively low 5.12% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 27.92%), and a well-cushioned interest coverage level of 61.66x, TJX-US can probably borrow quickly. We classify the company as Quick & Able in terms of its capacity to raise additional debt.
  • Of the 10 chosen peers for the company, only 8 of the stocks have an outstanding debt balance. Companies with no debt include URBN-US and AEO-US.

TJX-US has maintained its Quick & Able profile from the recent year-end.

  • TJX-US‘s interest coverage is upward trending and is now over one standard deviation above its five-year average interest coverage of 57.48x.
  • The increase in its interest coverage to 61.66x from 55.85x (in 2017) was also accompanied by an increase in its peer median during this period to 7.41x from 6.73x.
  • Interest coverage rose 5.14 points relative to peers.
  • TJX-US‘s debt-EV is similar to last year’s high of 5.12%, which compares to a low of 2.46% in 2013.
  • Compared to 2017, debt-EV has remained relatively stable for both the company (5.12%) and the peer median (27.92%).

Access the detailed analysis for The TJX Cos., Inc.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Ross Stores, Inc. 1.65 1.64 110.6 393.97
Urban Outfitters, Inc. 0 2.53 0 499.46
Gap, Inc. 15.45 1.77 19.35 113.69
Nordstrom, Inc. 31.83 1.01 7.57 42.54
Stein Mart, Inc. 51.82 1.78 -8.32 14.22
American Eagle Outfitters, Inc. 0 1.82 0 999
Ascena Retail Group, Inc. 77.68 1.32 1.8 26.07
Macy’s Inc 49.28 1.42 4.94 25.73
Target Corporation 27.92 0.91 7.41 43.12
Gordmans Stores, Inc. 92.09 1 -4.35 -1.68
TJX Companies Inc 5.12 1.63 61.66 141.47
Peer Median 27.92 1.63 7.41 43.12
Best In Class 1.65 2.53 110.6 999

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Company Profile

The TJX Cos., Inc. engages in the retail of off-price apparel and home fashion products. It operates through the following segments: Marmaxx, HomeGoods, TJX Canada, and TJX Europe. The Marmaxx segment sells family apparel including footwear and accessories; and home fashions including home basics, accent furniture, lamps, rugs, wall décor, decorative accessories, giftware, and other merchandise. The HomeGoods segment offers home basics, giftware, accent furniture, lamps, rugs, wall décor, and decorative accessories. The TJX Canada segment operates the Winners, Marshalls, and HomeSense chains in Canada. The TJX Europe segment operates T.K. Maxx and HomeSense chains in Europe. The company was founded by Stanley Harris Feldberg and Sumner L. Feldberg in 1956 and is headquartered in Framingham, MA.

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