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The TJX Companies (TJX) Poised on Shareholder Friendly Moves

Zacks Equity Research
·4 min read

The TJX Companies, Inc. TJX is keen on enhancing shareholders’ returns through stock buybacks and declaring dividends. Apart from these, the company has been benefiting from focus on store and e-commerce growth efforts.

Shareholder Friendly Moves

Incidentally, the leading global off-price retailer of apparel and home fashions recently announced that it has reinstated its share repurchase program. In this regard, management plans to repurchase the company’s stock worth $1 billion to $1.25 billion through the fiscal ending Jan 29, 2022. Notably, the company has almost $3 billion worth stocks remaining under its existing share buyback plans.

Apart from this, The TJX Companies recently announced a quarterly dividend of 26 cents per share, payable on Sep 2, 2021 to shareholders of record as of Aug 12, 2021. The TJX Companies currently has a free cash flow yield of 8.1%, dividend payout of 70.7% and dividend yield of 1.5%. With an annual free cash flow return on investment of 36.1%, which is ahead of the industry’s 30.4%; the dividend is likely to be sustainable. We believe that dividend payouts and share buybacks are the biggest enticements for investors and The TJX Companies is committed toward boosting shareholders’ wealth.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

Impressive Sales

In the second quarter of fiscal 2022 (as of May 27, 2021), The TJX Companies witnessed overall open-only comp store sales trends that were prevalent in the first quarter. In the fiscal first quarter, the metric increased 16% from fiscal 2020 level. The metric increased 12%, 40%, 9% and 11% for Marmaxx (U.S.), HomeGoods (U.S.), TJX Canada and TJX International (Europe & Australia), respectively. The company saw encouraging open-only comp store sales in overall apparel category as consumers are starting to return to normal activities in the quarter.

Well, The TJX Companies has been benefiting from its solid store and e-commerce growth efforts. It regularly opens stores and expands fast across the U.S., Europe, Canada and Australia. Notably, The TJX Companies opened 67 new stores, taking the total count to 4,639 during first-quarter fiscal 2022. Moreover, the company grew its square footage by 1% year over year during the quarter. Earlier the company had highlighted that it expects to incur capital expenditures in the range of $1.2-$1.4 billion for fiscal 2022. This is likely to be spent on opening new stores, remodels, relocations as well as investments in its distribution network and infrastructure.

Further, with increasing number of consumers resorting to online shopping, The TJX Companies has undertaken several initiatives to boost online sales and strengthen its e-commerce business. We believe that The TJX Companies’ off-price model along with its strategic store locations, impressive brands and fashion products are likely to drive performance, both in stores and online.

Notably, shares of this Zacks Rank #3 (Hold) company have gained 4.1% in the past six months compared with the industry’s growth of 5.8%.

Some Solid Retail Picks

Dillard’s, Inc. DDS, which sports a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 24.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Target Corporation TGT which sports a Zacks Rank #1, has a long-term earnings growth rate of 13.3%.

Dollar General Corporation DG which carries a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 12.1%.

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