TJX Companies Stock Poised to Hit a New High This Year

Key Points

• The TJX Companies Q3 report was uninspiring for traders but more than sufficient for long-term investors. 
• Growth, outperformance, cash flow, and capital returns support the outlook for steadily rising share prices in 2025 and 2026. 
• Analysts' trends provide a tailwind in 2024, leading this market to another new all-time high. 

Tepid guidance or not, the TJX Companies NYSE: TJX stock price can hit another new high this year because the retail trends driving it remain in place. Those include growth driven by price-conscious shoppers, outperformance, margin strength, cash flow, and capital returns, which are expected to continue. The guidance was uninspiring for traders but aligned with the trends and robust outlook for capital return, which is good news for investors.

The TJX Company pays dividends and buys back shares in significant quantities, reducing the count by 1.45% in Q3, in addition to the 1.2% reduction post in Q3 of fiscal 2024. The takeaway is that TJX has all the hallmarks of a quality buy-and-hold stock and will likely sustain an uptrend in its share prices indefinitely. 

TJX Companies Has a Solid Quarter: Raises Profit Guidance 

TJX Companies had a solid quarter, growing revenue by 5.7%, leading the industry by a low-single-digit margin. The net outpaced the consensus reported by MarketBeat on strength in all segments and transaction volume. International was the segment showing the most strength, with comps up by 7% year-over-year (YoY), with Home Goods up 3%, Canada up 2%, and the core Marmaxx segment up 2%. Comps are up 3% systemwide. 

Margin is another area of strength, with the gross margin widening 50 basis points, SG&A flat, and the pre-tax profit margin up by 30 bps. The pre-tax profit margin came in at the high end of expectations at 12.3% and is expected to remain solid through the year’s end. The net result is leverage gains on the bottom line, with the GAAP EPS growing by 11% and outpacing consensus by 400 bps.

Guidance is also an arad of strength. The company’s guidance is tepid relative to the consensus forecast but improved from the prior outlook. The revenue forecast was maintained, but the margin is expected to be stronger and drive EPS in the range of $4.15 to $4.17 for the year, or up nearly 8%. The bad news is that analysts had expected $4.17 or higher, but the balance sheet health and capital return outlook offsets it. 

The TJX Company Has a Fortress Balance Sheet and Can Sustain Capital Returns in 2025

The TJX Company has a robust cash flow capable of sustaining investments and acquisitions like those made in 2024 while paying shareholders and maintaining balance sheet health. Highlights at the end of Q3 include a cash build, steady inventory, and increased current and total assets. A slight increase in liability offsets the build of assets, but the increase is inconsequential. Long-term debt remains flat, and leverage is low at 0.35x equity, and equity is rising. Shareholder equity increased nearly 20% year-over-year and is expected to continue rising in Q4 and 2025. 

Analysts provide a tailwind for TJX stock prices in 2024. The analysts' sentiment has been firm at Moderate Buy all year while the consensus price target steadily rose. The price target is up 30% YoY and points to a mid-single-digit stock price increase from critical resistance levels, which is good for another new all-time high. The recent targets suggest a likely move to the high-end range. 

The technical action is favorable. The market for TJX stock fell after the release but quickly rebounded to show support at the 30-day moving average. With this in play and the indicators set up to fire strong bullish crossovers, a move to new highs seems likely. The critical resistance target is near $121; a move above it would trigger the market and likely lead to another sustained rally. In that scenario, this market could easily move to the consensus of $127.50 and continue moving higher over the long term.