$TJX daily pick: buy a starter before Wednesday's report, add $125 to $130
$TJX: I'm buying a starter in the company behind @tjmaxx before Wednesday's report.
At Friday's close ($134.37):
20% off the June high and 11% under the 200-day
About 26x this year's adjusted EPS guide
Q2 comps up 4% with HomeGoods up 7% and Marmaxx up only 1%
Reports Wednesday before the open
I think the Marmaxx slowdown is fixable because management called it a merchandise mix problem of its own making while the other three divisions grew comps 6% to 7%. I would add between $125 and $130.
Is anyone else finding better stuff at HomeGoods than at T.J. Maxx lately?
Not financial advice
What happened: in August TJX reported Q2 comps up 4% (above its plan) and adjusted EPS of $1.22, up 11%. But Marmaxx (T.J. Maxx, Marshalls and Sierra) comps rose only 1% with fewer customer transactions. The stock fell from $150.85 to $140.53 in three days and closed at $122.84 on Sep 16. On Friday Gordon Haskett downgraded it to Hold with a $130 target, citing traffic going to Ross.
Why I want to own it: management raised the full-year adjusted EPS guide to $5.15 to $5.20 (up 9% to 10%) and said the third quarter started strong with Marmaxx improving. It plans to speed up store openings to 4% a year starting next year and now sees room for 7,500 stores long term.
The plan: a starter here and adds between $125 and $130, near the September lows. A weekly close under the Sep 16 low of $122.84 (about 9% lower) means I am wrong. First target is the 200-day at $150.46 and the second is the June 12 close of $168.41.
The risks: the Q3 guide is comps up 2% to 3% and adjusted EPS of $1.30 to $1.32, while Robinhood shows consensus at $1.33. It also trades at about 25x trailing earnings, above most retailers, so another weak Marmaxx quarter could send it to my add zone quickly. That is why I am starting small.
Sources: TJX Q2 FY27 release: comps +4%, Marmaxx +1%, HomeGoods +7%, adj. EPS +11%, FY27 adj. EPS guide $5.15-$5.20, Q3 guide, 4% · TJX Q2 FY27 10-Q: Marmaxx comp +1% on higher basket and fewer customer transactions · Yahoo/Zacks: Marmaxx 1% comp below plan, CEO called it self-inflicted · Investing.com: Gordon Haskett downgrade to Hold, $130 target, Ross traffic; Wells Fargo PT $135; Q3 report Nov 18 · MarketScreener/MT Newswires: Gordon Haskett downgrades TJX to Hold, $130 target · MarketBeat: downgrade, Q2 adj. EPS $1.22 vs $1.19 expected, revenue $15.18B
Not financial advice. For informational and educational purposes only.