2023-05-23 11:57:31 ET
Argus weighed in on TJX Companies ( NYSE: TJX ) after taking in the retailer's Q1 earnings report .
The firm is even more constructive on the setup for TJX Companies ( TJX ), despite quarterly results that were below expectations. Analyst Chris Graja and team reiterated a Buy rating on TJX and lifted the price target up to $95 from $92.
Graja wrote the company's edge is that it offers a treasure hunt of unique, brand-name products at bargain prices. TJX's arsenal of +1,200 buyers, lean cost structure, and ability to satisfy value-conscious shoppers is called a competitive advantage with inflation pressures expected to continue to impact consumer spending.
"When vendors and other retailers are overstocked, the merchants at TJX have the opportunity to scoop up great items that enhance the treasure hunt atmosphere that drives traffic and sales."
Looking ahead at the macro climate, TJX Companies ( TJX ) is noted to have had a long history of delivering positive comparable sales even during recessions. The retailer's diverse group of shoppers includes some customers in the higher income brackets, who are seen being more resilient to economic downturns. TJX's store locations are also called a positive. The location of many TJX stores in shopping centers that are also occupied by grocery stores is seen attracting frugal shoppers skipping full trips to the mall.
In terms of valuation, TJX ( TJX ) shares trade at 22.8X Argus' FY24 EPS estimate and at 20.8X the FY25 estimate. Graja noted TJX has historically earned high returns on shareholders' equity and is anticipated to maintain a very healthy payout ratio during its steady-growth phase due to a lean cost structure and efficient use of its retail space.
Shares of TJX Companies ( TJX ) dipped 0.38% in late morning trading on Tuesday to keep up the six-week trend of basically sideways action.
More on TJX Companies:
- TJX Companies: No Slowdown Here, Reiterate Buy
- TJX earnings call transcript
- Growth metrics on TJX Companies
- Seeking Alpha's Quant Rating for TJX Companies
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TJX Companies is seen having competitive edge over retail peers in inflation environment