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Home » We’re raising our price target on TJX after a strong beat and raise
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We’re raising our price target on TJX after a strong beat and raise

adminBy adminNovember 19, 2025No Comments6 Mins Read
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TJX Companies on Wednesday reported a beat-and-raise quarter as consumers continue to focus on getting the most bang for their depreciating buck. The stock is a bright spot in the banged-up retail sector. Revenue in the three months ended Nov. 1 increased 7.5% year over year to $15.12 billion, exceeding the consensus estimate of $14.85 billion, according to LSEG. Earnings per share (EPS) in the period came in at $1.28, beating expectations of $1.22 and indicating year-over-year growth of more than 12%. Same-store sales also came in ahead of expectations at 5%, better than the 4% the Street was looking for, according to FactSet. Shares of TJX, owner of T.J. Maxx, Marshalls, Homesense, Sierra, and HomeGoods, gave up early-session gains — a move we attribute to profit-taking, as the initial rise pushed the stock to a fresh all-time high. Nothing in the numbers or the earnings call changes our view that the off-price retailer is winning, and will continue to win, thanks to its ability to offer best-in-class value to consumers increasingly worried about affordability. TJX 1Y mountain TJX 1-year return Bottom line TJX posted better-than-expected results in each of its four operating segments — Marmaxx, HomeGoods, TJX Canada, and TJX International (Europe & Australia)— for the third straight quarter. In addition, consolidated same-store sales results beat expectations, rising 5% from 4% in the second quarter. That was driven by a combination of a “higher average basket” and an increase in customer transactions, CFO John Klinger said on the earnings call with investors. Better yet, management said the streak should continue and raised its full-year outlook. The results provide a stark contrast to another retailer that reported on Wednesday: Target , which reported underwhelming quarterly revenue and a downbeat profit outlook. TJX’s advantage? Its ability to deliver “very good value” at a time when consumers remain highly price sensitive, Jim Cramer said on CNBC. Indeed, we started a position in TJX back in 2022 with the view that elevated inflation would push consumers to seek better deals at TJX, Costco , and Amazon , retailers that, thanks to their enormous scale, can offer top brands at discount prices. (We also own Costco and Amazon.) That is exactly what happened to TJX in the third quarter, and it should continue into the critical holiday shopping season, which can account for nearly 30% of a retail company’s annual sales. On the call, CEO Ernie Herrman said the current (fourth) quarter is “off to a strong start” and the “availability of quality branded merchandise has been exceptional.” Given the results, forward commentary, and our view that the company’s business model of taking high-quality excess inventory off the hands of full-priced retailers and reselling it at a discount is working, we are reiterating our buy-equivalent 1 rating and increasing our price target by ten bucks to $160 from $150. TJX Companies Why we own it : The owner of T.J. Maxx, Marshalls, and HomeGoods is well-suited to the current economic environment, offering inflation-weary customers a wide range of merchandise at compelling prices and an in-person “treasure hunt” shopping experience. It is also better suited to respond to tariffs than retailers that import most of their merchandise directly. Competitors : Ross Stores and Burlington Stores Last buy : July 21, 2025 Initiation : Aug. 24, 2022 Quarterly commentary Same-store sales results, which TJX defines as sales at locations or e-commerce sites that have been in operation for at least two consecutive fiscal years, were as follows: They accelerated sequentially to 6% from 3% at Marmaxx, which is home to the T.J. Maxx, Marshalls, and outdoor-focused Sierra chains in the U.S. CFO Klinger noted strength in the apparel and home businesses. “It was also great to see strength in our store performance across all regions and income demographics, which speaks to the broad-based appeal of our values,” he added. Same-store sales growth at HomeGoods was 5%, in line with the previous quarter. Klinger said the segment’s profit margin increased to 13.5% year over year, up 120 basis points from the year-ago period. Sales fell slightly at TJX Canada to 8% from 9%, and at TJX International, to 3% from 5%. Regarding the “miss” in cost of sales (see chart above), note that more sales will inevitably increase the cost of sales. Investors should instead focus on gross margin, which greatly exceeded expectations and expanded by 101 basis points versus the year-ago period. Klinger attributed the expansion “to an increase in merchandise margin, primarily driven by lower freight costs, expense efficiencies, and expense leverage on sales.” SG & A expense was six basis points higher as a percentage of sales than a year ago, with management attributing the slight increase to “incremental store wage and payroll costs, a contribution to the TJX Foundation, and higher incentive compensation accruals.” The team also offset the costs of tariffs on imported goods. Guidance Here’s what the company expects to deliver for its fiscal 2026 fourth quarter (all estimates are from FactSet, except for sales and earnings, which are from LSEG): Sales for the fourth quarter are expected to be between $17.1 and $17.3 billion. That compares to expectations of $17.31 billion. Same-store sales growth of 2% to 3%, with a midpoint of 2.5%, is below the consensus projection of 3.1%. Pretax profit margin in the range of 11.7% to 11.8%, slightly below the 11.9% estimate. Earnings per share (EPS) in the range of $1.33 to $1.36, a miss versus the consensus EPS estimate of $1.37 per share. TJX also raised its full-year guidance across all the metrics for which it provides an outlook: Sales for the full year are now expected to be between $59.7 billion and $59.9 billion, up from the prior range of $59.3 to $59.6 billion, and ahead of expectations of $59.7 billion at the midpoint. Same-store sales are now expected to grow 4%, up from the previously provided 3% target. That’s better than the 3.4% the Street was expecting. Pretax profit margin is now expected to be 11.6%, up from the 11.4% to 11.5% range previously provided, and ahead of the 11.5% the Street was looking for at the midpoint. EPS is now expected to be between $4.63 and $4.66 per share, up from the prior range of $4.52 to $4.57, and better than the $4.61 per share expected. (Jim Cramer’s Charitable Trust is long TJX. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.



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Division over the October rate cut and doubts about December

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