TJX Trading Cheaper Than Industry: What's the Next Best Move?

Core Insights - The TJX Companies, Inc. is trading at a modest discount compared to the Zacks Retail - Discount Stores industry, with a forward 12-month P/E ratio of 28.83, slightly below the industry average of 30.27 [1][10] - Over the past three months, TJX stock has surged 14.3%, outperforming the industry, the Zacks Retail and Wholesale sector, and the broader S&P 500 [6][10] - Management raised fiscal 2026 sales and EPS guidance, reflecting strong momentum and confidence in sustaining growth [10][17] Valuation and Performance - TJX's valuation profile is balanced compared to peers like Costco, Ross Stores, and Burlington, trading at a premium to off-price rivals while being cheaper than high-growth peers [5][10] - The stock closed at $140.04, 3.8% below its 52-week high of $145.58, and trades above its 50-day and 200-day moving averages, indicating a bullish trend [9][11] Growth Drivers - TJX's flexible off-price model allows quick adjustments to consumer trends, driving customer engagement and repeat visits [14] - The company reported a 4% increase in comparable store sales in Q2 of fiscal 2026, with broad-based gains across divisions [15] - Expansion remains a key strategy, with plans to add over 1,800 locations, including approximately 130 net new stores for fiscal 2026 [16][17] Financial Outlook - Management's updated guidance for fiscal 2026 includes projected net sales of $59.3-$59.6 billion and EPS of $4.52 to $4.57, indicating growth from the previous year [17] - The Zacks Consensus Estimate for EPS has seen upward revisions, with expectations of 7.5% growth this year and 10% next year [18] Challenges - Currency and trade issues are significant headwinds, with management expecting unfavorable foreign exchange to reduce EPS growth by about 1% [19] - The retail environment remains highly promotional, which could limit pricing power and affect traffic and profitability [20]