TJX Companies (TJX) stock is lower Wednesday even after the off-price retailer and TJ Maxx parent beat top- and bottom-line expectations for its fiscal 2025 third quarter and raised its full-year outlook.
In the 13 weeks ended November 2, TJX's revenue increased 6% year over year to $14.1 billion, driven by comparable-store sales growth across all its brands and geographies, including 2% combined growth at TJ Maxx, Marshalls and Sierra and 3% collective growth at HomeGoods and HomeSense stores across its U.S. stores.
The retailer also said its earnings per share (EPS) rose 10.7% from the year-ago period to $1.14.
"Our comparable-store sales increase of 3% was at the high-end of our plan, and both pretax profit margin and earnings per share came in well above our expectations," said TJX CEO Ernie Herrman in a statement. "Across the Company, customer transactions drove our comparable-store sales increases, which tells us that our values and treasure hunt shopping experience are appealing to a wide range of customers."
The results beat analysts' expectations. Wall Street was anticipating revenue of $13.95 billion and earnings of $1.10 per share, according to Yahoo Finance.
As a result of its "above-plan profitability results in the third quarter," TJX raised its full-year profit forecast. It now expects to achieve EPS in the range of $4.15 to $4.17, up from its previous forecast of $4.09 to $4.13. Management added that it continues to anticipate consolidated comparable-store sales to rise 3%.
For the fourth quarter, TJX said it expects to achieve comparable-store sales growth in the range of 2% to 3% and earnings per share between $1.12 to $1.14. However, the midpoint of this range, $1.13 per share, came up short of the average analyst estimate of approximately $1.18 per share.
"The fourth quarter is off to a strong start, and we are excited about our opportunities for the holiday selling season," Herrman said.
Is TJX stock a buy, sell or hold?
TJX has slightly outperformed the broader market in 2024, up 29% for the year to date on a total return basis (price change plus dividends) vs the S&P 500's 26% gain. And Wall Street is bullish on the consumer discretionary stock.
According to S&P Global Market Intelligence, the average analyst target price for TJX stock is $126.55, representing implied upside of roughly 7% to current levels. Meanwhile, the consensus recommendation is a Buy.
Financial services firm UBS Global Research is one of the more bullish outfits on TJX stock with a Buy rating and $148 price target.
"We think TJX's sales and EPS outlooks justify a premium valuation," said UBS analyst Jay Sole in a November 11 note. "We see TJX as a defensive stock well-positioned to continue to take market share from weaker channels, such as department stores. This should allow the company to deliver solid comparable-store sales growth and fixed cost leverage."
