TJX Companies: The Retail Stock That Actually Benefits From Tariffs and Inflation

Core Viewpoint - TJX Companies reported strong third-quarter results, showcasing the effectiveness of its off-price retail model with comparable-store sales growth of 5%, surpassing analyst estimates of 3.7% [1] Group 1: Financial Performance - All concepts, including TJ Maxx, Marshalls, HomeGoods, and international operations, recorded positive comparable sales, contributing to a pretax profit margin of 12.7%, an increase of 40 basis points from the previous year [2] - The company achieved a market capitalization of $172 billion, with a gross margin of 30.87% and a dividend yield of 1.06% [8] - TJX returned $3.1 billion to shareholders in the first nine months of fiscal 2026 through $1.7 billion in buybacks and $1.4 billion in dividends [12] Group 2: Business Model and Strategy - TJX's business model capitalizes on purchasing excess inventory from manufacturers, allowing it to thrive during economic turbulence [3][4] - The company plans to expand its store base from 5,191 to a target of 7,000 locations over the next 10 to 15 years, with significant growth potential in HomeGoods [6] - Management projects 9% earnings growth for the full fiscal year, supported by consistent same-store sales increases [7] Group 3: Market Position and Valuation - TJX stock has increased approximately 32% over the past year, reflecting high market expectations, with a forward P/E ratio around 31, indicating the stock is not cheap [5] - The company is gaining market share and expanding margins, positioning itself as a high-quality investment for long-term investors [12] - Despite its strengths, the stock may not be a compelling buy at current prices, as the valuation reflects significant future success expectations [14]