Aug 01, 2017

The TJX Companies, Inc. (NYSE: TJX) Zacks Rank 3-Hold

$70.31 USD ( As of 07/31/17 ) Style:Value: Growth: Momentum: VGM:

Data Overview Summary

52 Week High-Low $83.64 - $66.66 TJX Companies’ shares have declined in the last three months due to higher payroll,
20 Day Average Volume 4,365,719
which are pressurizing its margins. Further, the company expects incremental
investments, additional supply chain costs and pension costs to dent margins in the
Beta 0.77
coming quarters. Moreover, being an off-price retailer, TJX Companies cannot
Market Cap 45.23 B increase the price of its products despite rising product cost. Unfavorable foreign
Dividend / Div Yld $1.25 / 1.78% currency translations and lack of presence in the emerging markets have been posing
Industry Retail - Discount Stores
as headwinds for the company. Nevertheless, we are optimistic about TJX Companies
business expansion initiatives which include aggressive store opening strategies and
Industry Rank 76 / 265 (Top 29%)
plans to add more categories to the online shopping site. Its brand enhancing plans in
Current Ratio 1.64 the form of product innovation and marketing campaigns are also appealing.
Debt/Capital 32.86% Estimates for the company have also remained stable ahead of its second quarter
fiscal 2018 earnings release.
Net Margin 6.96%

Price/Book (P/B) 9.83

Price/Cash Flow (P/CF) 13.66 Elements of the Zacks Rank

Earnings Yield 5.57%
Agreement Estimate Revisions (60 days)
Debt/Equity 0.49

Value Score 0% 0% 0% 0%
P/E (F1) 18.13

P/E (F1) Rel to Industry -13.26 Q1 (Current Qtr) Q2 (Next Qtr) F1 (Current Year) F2 (Next Year)
PEG Ratio 1.69 Revisions: 0 Revisions: 0 Revisions: 0 Revisions: 0
Up: 0 Down: 0 Up: 0 Down: 0 Up: 0 Down: 0 Up: 0 Down: 0
P/S (F1) 1.27

P/S (TTM) 1.35

Magnitude Consensus Estimate Trend (60 days)
P/CFO 13.66

P/CFO Rel to Industry 6.57

EV/EDITDA Annual 9.79

Growth Score
Proj. EPS Growth (F1/F0) 10.76% 60 30 7 Current 60 30 7 Current 60 30 7 Current 60 30 7 Current
Days Days Days Days Days Days Days Days Days Days Days Days
Hist. EPS Growth (Q0/Q-1) 1.69 Q1 0% Q2 0% F1 0% F2 0%
Qtr CFO Growth -34.74

2 Yr CFO Growth 1,157.73

Upside Zacks Consensus Estimate vs. Most Accurate Estimate
Return on Equity (ROE) 51.02%

(NI - CFO) / Total Assets -7.72

Asset Turnover 2.62

Momentum Score Most Accurate: 0.84 Most Accurate: 1.00 Most Accurate: 3.88 Most Accurate: 4.17
Zacks Consensus: 0.84 Zacks Consensus: 1.00 Zacks Consensus: 3.88 Zacks Consensus: 4.17
1 week Volume change 1.35%
Q1 0.00% Q2 0.00% F1 0.00% F2 0.00%
1 week Price Cng Rel to Industry 2.13%

(F1) EPS Est 1 week change 0.00%

Surprise Reported Earnings History
(F1) EPS Est 4 week change 0.00%

(F1) EPS Est 12 week change -0.71%

(Q1) EPS Est 1 week change 0.00%

Reported: 0.82 Reported: 1.03 Reported: 0.91 Reported: 0.84 Average 4 Qtr
Surprise
Estimate: 0.79 Estimate: 1.00 Estimate: 0.87 Estimate: 0.80
Q End 04/17 Q End 01/17 Q End 10/16 Q End 07/16

© 2017 Zacks Investment Research, All Rights Reserved 10 S. Riverside Plaza Suite 1600 · Chicago, IL 60606
 The data on the front page and all the charts in the report represent market data as of 07/31/17, while the report's text is as of
07/26/2017

Overview
Based in Framingham, MA, The TJX Companies, Inc. is a leading off-
price retailer of apparel and home fashions in the U.S. and
worldwide.

The TJX Companies operates through four business segments:

In the U.S., it operates through two segments, namely, Marmaxx

(through stores under the names of T.J. Maxx and Marshalls) and
HomeGoods.

Marmaxx divisions (64% of FY 17 Sales) sell family apparel

(including footwear and accessories), home fashions (including home
basics, accent furniture, lamps, rugs, wall décor, decorative
accessories and giftware) and other merchandise. HomeGoods (12%
of FY17 Sales) chain offers home basics, giftware, accent furniture,
lamps, rugs, wall décor and decorative accessories from around the
world, seasonal and other merchandise.

In Canada, it operates through TJX Canada (9% of FY17 Sales)

through stores under the names of Winners, Marshalls and
HomeSense and in Europe, it operates through TJX International
(15% of FY17 Sales) through stores under the names of T.K. Maxx
and HomeSense.

Zacks Equity Research: TJX www.zacks.com Page 2 of 9

 Reasons To Buy:
Product and Geographic Diversity: TJX Companies offers a wide array of products ranging TJX Companies'
from family apparels to home décor, gift items and furniture. This acts as a buffer to the wide array of
company’s sales and margins — if one category fails, the other category can make up.
products, aggressive
Similarly, the company is stretched over a vast geographical expanse in North America,
Canada and Europe, which helps it to maintain sales and margins. Moreover, TJX recently store opening
expanded its sourcing machinery and currently sources from approximately 18,000 vendors in strategy and solid
over 100 countries instead of only domestic vendors. This ensures more variety in the initiatives to boost
company’s stocks. The company’s endeavor to boost international presence by acquiring sales are
Australia-based Trade Secret complements its business and helps to capitalize on the growth
opportunities in the country.
encouraging.

Consistent Comps Growth: TJX Companies has reported positive comparable store sales
(comps) growth in the past 32 quarters. Higher traffic driven by both new and existing customers shopping more frequently resulted
in the company’s impressive performance. The company’s fresh stock and widespread sourcing machinery has helped it maintain
a loyal customer base.

Aggressive Store Expansion: TJX Companies has an aggressive store opening strategy. The company regularly opens stores and
expands fast across the U.S., Europe and Canada. With almost 3,800 stores in nine countries currently, TJX plans to grow to 5,600
stores over the long term, along with plans to open nearly 250 stores in fiscal 2018. This includes further testing of the Sierra
Trading Post brick-and-mortar format, with 15 additional store openings planned across the U.S. this year. In North America, TJX
plans to add over 1,400 stores in the long term. It also plans to expand HomeGoods chain to at least 1,000 stores, almost twice of
its existing base. In Canada, TJX plans to build about 500 stores over the long term and expand to 975 outlets, nearly double its
current base in Europe.

Foray into e-Commerce to Boost Sales: An increasing number of retailers are focusing on online businesses to reach a greater
number of customers. TJX Companies has also undertaken several initiatives to boost online sales by recruiting an experienced
internet management team. The company’s e-Commerce business Sierra Trading Post is also working towards growing its
business. Moreover, TJX’s official website tjmaxx.com, accessible from tablets and smartphones, appeals to the young generation
— the company’s main target consumers. TJX plans to add more categories to the online shopping site and invest categorically in
it to differentiate it from its brick-and-mortar stores.

Initiatives to Boost Sales: TJX Companies’ aggressive marketing and advertising campaigns through multiple mediums (TV, radio
and social media) have been boosting traffic at its stores. Its gift-giving initiatives, unique among off-price retailers and loyalty card
program (which offers consumers a non-credit card choice and soft benefits such as early shopping hours) also help to improve
customer engagement. Further, in order to encourage more frequent visits and cross-shopping of brands, the company is expanding
its loyalty programs in the U.S. and Canada.

Also, management believes in innovation and has been introducing new products to drive sales. The company has recently
launched its new U.S. home concept, HomeSense, which will offer its consumers a different mix of home fashions from HomeGoods
at good value.

Returns Value to Shareholders: The company has been returning value to its shareholders through dividends and share
buybacks. During the first quarter fiscal 2018, the company repurchased 4.5 million shares for $350 million and continues to
anticipate buying back $1.3 billion to $1.8 billion of TJX stock in fiscal 2018. The company also increased dividend by 20% in April,
marking the 21st consecutive year of dividend increases.

Reasons To Sell:
Off Price Retail Nature May Put Pressure on Margins: TJX Companies provides goods The Company is cautious
at discounted prices. Despite rising product costs, TJX, being an off-price retailer, of its lack of exposure in
cannot increase the price of its products, which leads to lower margins. emerging markets as well
as its pressurized margins.
Higher Costs to Pressurize Profits: TJX expects pre-tax margins to remain under
pressure for the next few quarters due to an increase in employee payroll. The
company announced wage increase of all full- and part-time hourly U.S. store associates during the fourth-quarter fiscal 2016
conference call. Higher wages are expected to negatively impact fiscal 2018 earnings by 3%. Further, the company expects
incremental investments, additional supply chain costs and pension costs to pressurize margins in the coming quarters.

The impact of such factors is visible on the company’s share price performance. Shares of TJX Companies have declined 15.2% in
the past three months compared with the broader Retail-Wholesale sector’s gain of 3.5%.

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 Lack of Exposure in Emerging Markets: TJX Companies does not have any presence in the developing markets which deprives it of
the benefits of high growth opportunities of the developing nations like China, Brazil, India, Mexico, Russia and Southeast Asia.
Since the developed markets of Europe, America and Canada are already saturated, most of the U.S. companies are looking toward
the emerging ones, which offer great growth opportunity owing to the growing population and affluent middle class. TJX Companies,
however, does not have any plans to open stores in any of these markets.

Currency Headwinds: TJX remains exposed to unfavorable foreign currency translations as it has a considerable international
presence. Overseas sales are worth less when they are converted into U.S. dollars. Foreign currency exchange will continue to
negatively impact net sales and operating profit in the near term.

Last Earnings Report

TJX Companies Q1 Earnings Top, Revenues Miss Estimates Quarter Ending 04/2017

Report Date May 16, 2017

The TJX Companies reported first-quarter fiscal 2018 results, wherein while earnings
exceeded expectations, revenues missed the same on the back of disappointing comps Sales Surprise -1.54%
growth. Following the results, the company narrowed its fiscal 2018 earnings guidance. EPS Surprise 3.80%
Quarterly EPS 0.82
In the reported quarter, earnings of $0.82 per share surpassed the Zacks Consensus
Annual EPS (TTM) 3.60
Estimate of $0.79 by 3.8%. Earnings also exceeded management’s guidance of
$0.76–$0.78 per share. The bottom line grew 7.9% year over year, backed by higher
consumer traffic and improved margins. Though management expected currency to hurt
earnings by 6%, it had a positive impact on earnings by $0.01 per share.

Quarterly Details

Net sales increased 3% year over year to $7.78 billion, backed by increase in comps and improved traffic. The figure missed the Zacks
Consensus Estimate of $7.91 billion by 1.5%. Currency headwinds impacted sales by 2 percentage points.

TJX Companies' consolidated comps grew 1%, but were lower from the 7% comps growth in the year-ago quarter. Higher comps at
HomeGoods and TJX Canada increased 3% each, while comps were flat in the Marmaxx and International segment. Comps were in
line with the management’s guidance of 0–1% growth.

TJX Companies' consolidated pre-tax profit margin contracted 0.2 percentage points (pp) year over year to 10.7% of sales. Gross
margin expanded 0.2 pp year over year to 29.0%. The upside was primarily driven by strong increase in merchandise margins and
gains related to the company’s inventory hedges, partially offset by higher supply chain costs.

However, selling, general and administrative costs, as a percentage of sales, went up 0.4 pp to 18.1% due to anticipated increase in
wages.

Other Financial Updates

During the first quarter, the company repurchased 4.5 million shares for $350 million. For fiscal 2018, the company continues to expect
to repurchase approximately $1.3 billion to $1.8 billion shares. Additionally, the company has announced a 20% increase in dividend in
the first quarter, marking the 21st consecutive year of dividend hikes.

Cash and cash equivalents were $2.67 billion as of Apr 29, 2017, while long-term debt was $2.23 billion. Shareholders’ equity was
$4.55 billion as of Apr 29.

During the quarter, the company increased its store count by 50 stores to a total of 3,862 stores. It had increased square footage by 4%
over the same period last year.

Q2 Guidance

TJX Companies issued its guidance for second-quarter fiscal 2018. The company expects earnings in the range of $0.81–$0.83 per
share compared with $0.84 reported a year ago. Wage increases are expected to negatively impact earnings growth by 2%. Currency
headwinds are likely to hurt earnings by 4%. The company expects the change in accounting rules for share-based compensation to
positively impact earnings growth by 1%.

For the second quarter, the company expects comps growth of 1–2% over last year’s growth.

Fiscal 2018 Guidance Narrowed

For fiscal 2018, TJX Companies has narrowed its earnings guidance. The company now projects adjusted earnings per share in the

Zacks Equity Research: TJX www.zacks.com Page 4 of 9

 range of $3.71–$3.78, compared with the prior-range of $3.69–$3.78. The adjusted guidance (excludes benefit of 11 cents from the
53rd week in fiscal 2018) would represent a 5–7% increase from fiscal 2017 adjusted results of $3.53 per share. Comps are also
expected to grow 1–2% for fiscal 2018.

Recent News
TJX Companies' Homesense Concept Stores Set for Launch – Jul 18, 2017

The company announced the opening of its new off-price home concept “Homesense” on Aug 17 at Framingham, MA. More
Homesense store openings are planned by the end of this year in Massachusetts and New Jersey.

TJX Companies Announces Quarterly Common Stock Dividend – Jun 5, 2017

The company announced quarterly dividend of $0.31 per common stock, payable on Aug 31, 2017 to the shareholders held in record as
on Aug 10.

Zacks Equity Research: TJX www.zacks.com Page 5 of 9

 Industry Analysis Zacks Industry Rank: 76 / 265 (Top 29%) Top Peers

Big Lots, Inc. (BIG)

Ross Stores, Inc. (ROST)
Dollar General Corporation (DG)
Target Corporation (TGT)
Tuesday Morning Corp. (TUES)
Dollar Tree, Inc. (DLTR)
Costco Wholesale Corporation (COST)
Fred's, Inc. (FRED)

Industry Comparison Retail - Discount Stores | Position in Industry: 6 of 11 Industry Peers

TJX X Industry S&P 500 DG DLTR ROST

VGM Score - -
Market Cap 45.23 B 6.08 B 21.03 B 20.61 B 17.06 B 21.53 B
# of Analysts 15 15 14 18 16 15
Dividend Yield 1.16% 0.77% 1.82% 0.54% 0.00% 0.96%

Value Score - -
Cash/Price -6.42 -6.42 9.94 1.47 -6.61 -15.67
EV/EBITDA 9.79 9.31 12.68 9.43 9.19 9.82
PEG Ratio 1.69 1.63 1.98 1.58 0.99 1.67
Price/Book (P/B) 9.83 3.45 3.19 3.72 3.03 7.74
Price/Cash Flow (P/CF) 13.66 9.83 13.51 11.94 9.83 12.17
P/E (F1) 18.13 16.78 18.78 16.78 16.21 17.55
Price/Sales (P/S) 1.27 0.77 2.47 0.88 0.77 1.56
Earnings Yield 5.57% 5.57% 5.27% 5.99% 6.20% 5.74%
Debt/Equity 0.49 0.23 0.68 0.48 1.09 0.14
Cash Flow ($/share) 4.76 4.76 5.43 5.95 6.76 3.60

Growth Score - -
Hist. EPS Growth (3-5 yrs) 10.76% 8.52% 7.13% 2.10% 1.51% 12.06%
Proj. EPS Growth (F1/F0) 9.89% 11.37% 9.33% 0.00% 16.70% 11.37%
Curr. Cash Flow Growth 3.93% 4.58% 5.35% 8.13% 49.09% 9.62%
Hist. Cash Flow Growth (3-5 yrs) 8.93% 8.78% 6.55% 8.63% 19.60% 11.69%
Current Ratio 1.64 1.50 1.35 1.39 1.91 1.58
Debt/Capital 32.86% 32.25% 41.73% 32.25% 52.23% 12.49%
Net Margin 6.96% 3.20% 9.63% 5.53% 4.13% 8.77%
Return on Equity 51.02% 22.92% 15.87% 22.89% 16.69% 40.59%
Sales/Assets 2.62 2.48 0.54 1.89 1.31 2.36
Proj. Sales Growth (F1/F0) 7.26% 4.89% 4.95% 6.28% 6.83% 7.36%

Momentum Score - -
Daily Price Chg 1.02% 0.55% 0.02% 0.55% 0.39% 0.82%
1 Week Price Chg 2.13% 1.27% -0.00% 1.45% 1.07% 1.27%
4 Week Price Chg -1.76% -1.76% 1.08% 4.49% 3.13% -5.00%
12 Week Price Chg -10.43% -12.41% 3.44% 1.99% -12.41% -14.41%
52 Week Price Chg -14.11% -20.09% 10.43% -20.09% -25.77% -10.17%
20 Day Average Volume 4,441,658 2,344,903 0 2,508,638 2,344,903 3,876,040
(F1) EPS Est 1 week change 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
(F1) EPS Est 4 week change 0.00% 0.00% 0.28% 0.06% 0.00% 0.00%
(F1) EPS Est 12 week change -0.71% 0.54% 1.00% 0.74% -0.77% 0.33%
(Q1) EPS Est Mthly Chg 0.00% 0.00% 0.00% 0.37% 0.00% 0.00%

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 Zacks Rank Education
The Zacks Rank is calculated from four primary inputs: Agreement, Magnitude, Upside and Surprise.

Agreement
This is the extent which brokerage analysts are revising their earnings estimates in the same
direction. The greater the percentage of estimates being revised higher, the better the score for this
component.

For example, if there were 10 estimate revisions over the last 60 days, with 8 of those revisions up,
and the other 2 down, then the agreement factor would be 80% positive. If, however, 8 were to the
downside with only 2 of them up, then the agreement factor would be 80% negative. The higher the
percentage of agreement the better.

Magnitude
This is a measure based on the size of the recent change in the current consensus estimates. The
Zacks Rank looks at the magnitude of these changes over the last 60 days.

In the chart to the right, the display shows the consensus estimate from 60-days ago, 30-days ago,
7-days ago, and the most current estimate The difference between the current estimate and the
estimate from 60-days ago is displayed as a percentage. A larger positive percentage increase will
score better on this component.

Upside
This is the difference between the most accurate estimate, as calculated by Zacks, and the
consensus estimate. For example, a stock with a consensus estimate of $1.00, and a most
accurate estimate of $1.05 will have an upside factor of 5%.

This is not an indication of how much a stock will go up or down. Instead, it's a measure of the
difference between these two estimates. This is particularly useful near earnings season as a
positive upside percentage can be used to help predict a future surprise.

Surprise
The Zacks Rank also factors in the last few quarters of earnings surprises. Companies that have
positively surprised in the recent past have a tendency of positively surprising again in the future (or
missing if they recently missed).

A stock with a recent track record of positive surprises will score better on this factor than a stock
with a history of negative surprises. These stocks will have a greater likelihood of positively
surprising again.

Zacks Style Score Education

The Zacks Style Score is as a complementary indicator to the Zacks Rank, giving investors a way to
focus on the best Zacks Rank stocks that best fit their own stock picking preferences. Value Score

Academic research has proven that stocks with the best Growth, Value, and Momentum Growth Score
characteristics outperform the market. The Zacks Style Scores rate stocks on each of these
individual styles and assigns a rating of A, B, C, D and F. An A, is better than a B; a B is better than Momentum Score
a C; and so on.
VGM Score
As an investor, you want to buy stocks with the highest probability of success. That means buying
stocks with a Zacks Rank #1 or #2, Strong Buy or Buy, which also has a Style Score of an A or a B.

Zacks Equity Research: TJX www.zacks.com Page 8 of 9

 Disclosures
The analysts contributing to this report do not hold any shares of this stock. The EPS and revenue forecasts are the Zacks
Consensus estimates. Additionally, the analysts contributing to this report certify that the views expressed herein accurately reflect the
analysts' personal views as to the subject securities and issuers. Zacks certifies that no part of the analysts compensation was, is, or
will be, directly or indirectly, related to the specific recommendation or views expressed by the analyst in the report. Additional
information on the securities mentioned in this report is available upon request. This report is based on data obtained from sources we
believe to be reliable, but is not guaranteed as to accuracy and does not purport to be complete. Because of individual objectives, the
report should not be construed as advice designed to meet the particular investment needs of any investor. Any opinions expressed
herein are subject to change. This report is not to be construed as an offer or the solicitation of an offer to buy or sell the securities
herein mentioned. Zacks or its officers, employees or customers may have a position long or short in the securities mentioned and buy
or sell the securities from time to time. Zacks uses the following rating system for the securities it covers which results from a
proprietary quantitative model using trends in earnings estimate revisions. This model is proven most effective for judging the timeliness
of a stock over the next 1 to 3 months. The model assigns each stock a rank from 1 through 5. Zacks Rank 1 = Strong Buy. Zacks Rank
2 = Buy. Zacks Rank 3 = Hold. Zacks Rank 4 = Sell. Zacks Rank 5 = Strong Sell. We also provide a Zacks Industry Rank for each
company which provides an idea of the near-term attractiveness of a company s industry group. We have 264 industry groups in total.
Thus, the Zacks Industry Rank is a number between 1 and 264. In terms of investment attractiveness, the higher the rank the better.
Historically, the top half of the industries has outperformed the general market.

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