TJX Companies (NYSE:TJX) is better known for store brands that include TJ Maxx, Marshall's and HomeGoods. Due to solid, consistent growth performance, investors have gotten to know the stock well and have bid it up to its all-time highs. This could imperil future shareholder returns, but the firm's operations still have plenty of growth potential. For more, see Earning Forecasts: A Primer.

Investopedia Markets: Explore the best one-stop source for financial news, quotes and insights.

Full Year Recap
Net sales improved 5.7% to $23.2 billion. Comparable store sales advanced 4%, consistent with the prior year's comp growth. This consisted of 5% same store sales growth in the flagship TJ Maxx and Marshall's domestic store base (76% of total sales), 6% comps at the HomeGoods chain that competes in the affordable home furnishings category with rivals including Pier 1 Imports (NYSE:PIR) and Big Lots (NYSE:BIG). International comps were more mixed, falling 1% in Canada (11.5% of total sales) and growing a modest 2% in Europe (12.5%).

Pre-tax income increased 11.4% to $2.4 billion, or just over 10% of total sales. This continues a trend whereby TJX has been able to leverage single digit top line growth into double-digit profit growth. Net income advanced at the same rate, rising to $1.5 billion. Share buybacks boosted the bottom line even further, with earnings per diluted share rising 17% to $1.93. Free cash flow condenses a bit, but was still strong at $1.1 billion, or approximately $1.44 per diluted share.

Outlook
For the coming year, TJX said to expect earnings between $2.21 and $2.31 per diluted share, which it estimates will represent growth in a range of 11 to 16% from the core earnings for 2011. Analysts project sales growth just north of 7% and total sales of nearly $25 billion.

The Bottom Line
TJX has been a model of consistency. Over the past three, five and 10-year periods, sales have grown in the mid- to high-single digits and management has been able to leverage this into mid-teens annual average profit growth. Profit growth has been even more impressive over the past three years, rising more than 25% annually.

This is an impressive feat given management has done so during a decade that has seen two major recessions. Key rivals, including Nordstrom (NYSE:JWN) and Macy's (NYSE:M) have taken note and are fast rolling out outlet versions of its full line stores via Nordstrom Rack and Bloomingdales outlet locations. This could eventually eat into TJX's dominance, but likely won't hinder its growth prospects for several years.

The only thing not to like about TJX is its valuation. At a forward P/E of 14, the earnings multiple is at its highest level over the past five years. In contrast, Macy's is at a much more reasonable 10 times forward earnings. However, TJX can be relied on for growing profits at a steady rate. Macy's revival is more recent and calls into question its ability to grow at a brisk pace for the next decade. (For additional reading, check out 5 Must-Have Metrics For Value Investors.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

At the time of writing, Ryan C. Fuhrmann did not own shares in any of the companies mentioned in this article.

Related Articles
  1. Stock Analysis

    Net Neutrality: Pros and Cons

    The fight over net neutrality has become an amazing spectacle. But at its core, it's yet another skirmish in cable television's war to remain relevant.
  2. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  3. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  4. Mutual Funds & ETFs

    ETF Analysis: ProShares Large Cap Core Plus

    Learn information about the ProShares Large Cap Core Plus ETF, and explore detailed analysis of its characteristics, suitability and recommendations.
  5. Mutual Funds & ETFs

    ETF Analysis: iShares Core Growth Allocation

    Find out about the iShares Core Growth Allocation Fund, and learn detailed information about its characteristics, suitability and recommendations.
  6. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI USA Minimum Volatility

    Learn about the iShares MSCI USA Minimum Volatility exchange-traded fund, which invests in low-volatility equities traded on the U.S. stock market.
  7. Stock Analysis

    Should You Follow Millionaires into This Sector?

    Millionaire investors—and those who follow them—should take another look at the current economic situation before making any more investment decisions.
  8. Professionals

    What to do During a Market Correction

    The market has corrected...now what? Here's what you should consider rather than panicking.
  9. Mutual Funds & ETFs

    ETF Analysis: Vanguard Mid-Cap Value

    Take an in-depth look at the Vanguard Mid-Cap Value ETF, one of the largest and most popular mid-cap funds in the U.S. equity space.
  10. Mutual Funds & ETFs

    ETF Analysis: Schwab US Broad Market

    Take an in-depth look at the Schwab U.S. Broad Market ETF, an incredibly low-cost fund based on a wide selection of the U.S. equity market.
RELATED TERMS
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Fast Fashion

    Definition of "fast fashion."
  3. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  4. Sucker Yield

    When an investor has essentially risked all of his capital for ...
  5. PT (Perseroan Terbatas)

    An acronym for Perseroan Terbatas, which is Limited Liability ...
  6. Ltd. (Limited)

    An abbreviation of "limited," Ltd. is a suffix that ...
RELATED FAQS
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!