Insights

• Revenue growth is decelerating, and profitability metrics are decreasing, indicating a potential slowdown in the company's financial performance.
• Liquidity ratios are below the industry average, suggesting lower liquidity compared to peers.
• The company is investing in fixed assets and returning capital to shareholders through dividends and share repurchases.
• Tariff headwinds and supply chain disruptions may impact future revenue growth and profitability.
• The company's flexible buying model and diverse vendor base are crucial for mitigating the impact of tariffs and capitalizing on market opportunities.

Analysis

• Revenue - Revenue growth is decelerating, with the most recent year-over-year growth rate of 3.79% falling short of the 5-year CAGR of 9.11%. - Sales/revenue decreased in the most recent quarter, raising concerns about future performance. - The company's Enterprise Value to Sales ratio is higher than the industry average, suggesting a premium valuation.
  • Profitability
    • Profitability metrics, such as Return on Average Assets, Return on Average Total Equity, and Net Profit Margin, are decreasing, indicating a potential weakening in profitability.
    • Gross Profit Margin is below the industry average, suggesting challenges in managing the cost of goods sold.
    • Net Profit Margin is above the industry average, indicating strong profitability.
  • Liquidity
    • Liquidity ratios, such as the Current Ratio and Quick Ratio, are below the industry average, indicating lower liquidity compared to peers.
    • The Current Ratio is slightly decreasing, suggesting a potential weakening in short-term liquidity.
  • Solvency
    • Solvency ratios, such as the Total Debt to Total Equity Ratio and Debt/EBITDA, are below the industry average, indicating lower leverage compared to peers.
    • The Total Debt to Total Equity Ratio is decreasing, suggesting a reduction in financial leverage.
  • Operational Efficiency
    • The company is investing in fixed assets, as evidenced by the increasing net property, plant, and equipment.
    • The company's ability to control operating expenses has been strong, but the recent decrease in revenue has impacted profitability.
  • Cash Flow Analysis - Net operating cash flow decreased significantly in the most recent quarter due to changes in working capital. - Capital expenditures remain high, driven by investments in store growth and supply chain improvements. - The company is returning capital to shareholders through dividends and share repurchases.
  • Risk Factors
    • Tariff headwinds and supply chain disruptions may impact future revenue growth and profitability.
    • Fluctuations in unusual expense make it difficult to assess the company's sustainable earnings.
  • Future Outlook
    • Future revenue growth is expected to be driven by new product launches, market expansion, and pricing strategies.
    • The company is expected to maintain its focus on cost control and operational efficiencies.
    • The company's ability to mitigate tariff headwinds and capitalize on market opportunities will be crucial for future earnings growth.

Benchmarks (as of 2025-06-02)

• Performance Comparison:
  • The TJX Cos., Inc. (TJX) has generally outperformed the Consumer Discretionary Select Sector SPDR Fund (XLY) over the 1-week, 3-month, 6-month, 1-year, 2-year, and 3-year periods. However, TJX underperformed XLY over the 1-month period. For example, over the last three years, TJX yielded 116.43% compared to XLY's 43.87%, a significant outperformance.
• Risk and Return Analysis:
  • The annualized returns for TJX have been higher than XLY over the 1-year, 2-year, and 3-year periods. For instance, the 3-year annualized return for TJX is 29.35% compared to 12.89% for XLY.
  • The annualized volatility for TJX has generally been lower than XLY. For example, in Q2 2022, TJX's volatility ranged from 40.8% to 49.55%, while XLY's ranged from 44.96% to 48.63%.
  • The maximum drawdown for TJX was -26.55% on 2022-06-30, while the maximum drawdown for XLY was -48.38% on 2025-04-21. This indicates that TJX experienced less severe declines from its peak values compared to XLY, suggesting a lower risk profile.
• Risk-Adjusted Performance:
  • The Sharpe Ratio for TJX has generally been higher than XLY, indicating that TJX offers better risk-adjusted returns. For example, as of Q2 2025, the Sharpe ratio for TJX is 1.32, while the Sharpe ratio for XLY is 0.93.
  • The Beta value for TJX has consistently been below 1, indicating that TJX is less sensitive to market movements compared to XLY, which has a Beta value consistently above 1. As of Q2 2025, the beta of TJX is 0.52, while the beta of XLY is 1.14.
• Overall Assessment:
  • Based on the analysis, The TJX Cos., Inc. (TJX) has demonstrated superior performance, lower volatility, and better risk-adjusted returns compared to the Consumer Discretionary Select Sector SPDR Fund (XLY). TJX's lower beta suggests it is less sensitive to market movements, making it a potentially more stable investment. The higher Sharpe ratio indicates that TJX provides better returns for the level of risk taken.

Peers Price History(as of 2025-06-02)

• Performance Comparison:
  • The TJX Cos., Inc. (TJX) has generally outperformed Burlington Stores, Inc. (BURL) and Ross Stores, Inc. (ROST) over the past three years. As of the latest data, TJX has significantly higher returns across 1-year (23.37%), 2-year (67.4%), and 3-year (116.43%) periods. While TJX has shown strong performance, there have been periods where ROST has come close to matching or slightly exceeding TJX's returns, particularly in shorter time frames like 3 months. BURL has consistently underperformed both TJX and ROST across all time periods.
• Risk and Return Analysis:
  • The annualized returns for TJX are higher than both BURL and ROST across 1-year, 2-year, and 3-year periods. For example, the 3-year annualized return for TJX is 29.35%, compared to 10.87% for BURL and 21.25% for ROST.
  • TJX generally exhibits lower annualized volatility compared to BURL and ROST. For instance, in Q2 2025, TJX's volatility ranged from 20.25% to 29.79%, while BURL's ranged from 39.8% to 62.44%, and ROST's ranged from 22.43% to 37.97%. This indicates that TJX's returns are more stable.
  • The maximum drawdown for TJX was -26.55% on 2022-06-30, which is significantly lower than BURL's -68.87% on 2022-09-29 and ROST's -44.13% on 2022-06-30. This suggests that TJX is less risky in terms of potential losses from peak values.
• Risk-Adjusted Performance:
  • The Sharpe Ratio for TJX is generally higher than those of BURL and ROST, indicating better risk-adjusted returns. For example, in Q4 2024, TJX's Sharpe Ratio ranged from 1.42 to 2.25, while BURL's ranged from 1.13 to 1.89, and ROST's ranged from 0.47 to 0.98.
  • The Beta value for TJX is consistently below 1, indicating that it is less sensitive to market movements compared to BURL and ROST. This further supports the conclusion that TJX is a less risky investment.
• Overall Assessment:
  • The TJX Cos., Inc. (TJX) demonstrates a strong combination of performance, lower risk, and better risk-adjusted returns compared to Burlington Stores, Inc. (BURL) and Ross Stores, Inc. (ROST). TJX has consistently outperformed its peers over the past three years, with higher annualized returns and lower volatility. The lower maximum drawdown and beta values indicate a more conservative risk profile. The higher Sharpe Ratio suggests that TJX offers better compensation for the level of risk taken.
  • A significant trend is the consistently lower volatility and beta of TJX compared to BURL, suggesting a more stable investment. However, investors should monitor the recent decreasing trend in Sharpe Ratios across all three companies, which may indicate changing market conditions or increased competition.

Peers Fundamentals(as of 2025-04-30)

1. Market Position and Size:

   • TJX is the largest company in its peer group by a significant margin, with a market capitalization of $143,279.08 million, dwarfing Burlington Stores ($14,690.37 million) and Ross Stores ($46,832.54 million).
   • This substantial market capitalization is supported by its superior revenue ($56,992 million), gross income ($17,417 million), EBITDA ($7,459 million), and net income ($4,830 million) compared to its peers.
   • TJX's dominant size and market position provide it with economies of scale, brand recognition, and negotiating power with suppliers.

2. Profitability and Efficiency:

   • TJX exhibits mixed profitability metrics. Its gross profit margin (30.56%) is lower than Burlington Stores (40.09%) and the industry average (42.35%), but higher than Ross Stores (27.78%).
   • However, TJX's EBITDA margin (13.09%) and net profit margin (8.47%) are higher than Burlington Stores (10.2% and 4.88%, respectively) and the industry average (10.16% and 3.33%, respectively), but lower than Ross Stores (14.37% and 9.79%, respectively).
   • TJX demonstrates strong efficiency in generating returns, with higher return on average assets (15.7%), return on average total equity (60.36%), return on average total capital (30.32%), and return on average invested capital (25.13%) compared to its peers and industry averages.

3. Financial Health and Stability:

   • TJX's current ratio (1.16) and quick ratio (0.51) are lower than Ross Stores (1.55 and 0.95, respectively) and the industry average (1.67 and 0.83, respectively), indicating potentially lower liquidity.
   • TJX's total debt to total equity ratio (153.62%) is lower than Burlington Stores (394.13%) and the industry average (208.08%), but higher than Ross Stores (89.95%).
   • TJX's debt/EBITDA ratio (0.38) is lower than Burlington Stores (1.5), Ross Stores (0.5) and the industry average (1.58), suggesting a strong ability to cover its debt obligations with earnings.

4. Valuation and Market Perception:

   • TJX's enterprise value to sales (2.72) and enterprise value to EBITDA (19.42) are higher than Burlington Stores (1.86 and 14.9, respectively), Ross Stores (2.22 and 14.29, respectively) and the industry average (1.51 and 10.19, respectively).
   • TJX's price-to-earnings ratio (30.28), price-to-book ratio (16.85), and price-to-sales ratio (2.55) are higher than Burlington Stores (28.58, 10.86, and 1.38, respectively), Ross Stores (22.51, 8.5, and 2.19, respectively) and the industry average (19.23, 3.51, and 1.26, respectively).
   • These higher valuation metrics suggest that the market has a more optimistic view of TJX's future prospects and/or is willing to pay a premium for its shares.

5. Cash Flow and Capital Management:

   • TJX demonstrates strong cash flow generation capabilities, with significantly higher net operating cash flow ($5,773 million) and free cash flow ($3,777 million) compared to its peers.
   • This indicates a robust ability to fund its operations, investments, and potential shareholder returns.
   • TJX's cash conversion ratio (2.63) is higher than Burlington Stores (-3.49) and Ross Stores (1.17), as well as the industry average (0.22).

6. Growth and Future Prospects:

   • TJX shows consistently lower growth compared to the peer group average in most metrics, including sales/revenue, EBITDA, net income, and basic earnings per share.
   • TJX's 3-year CAGR is lower than its 5-year CAGR for sales/revenue, EBITDA, net income, basic earnings per share, and EBIT margin, indicating a deceleration in growth over the most recent three years compared to the previous five years.
   • While TJX remains a dominant player in terms of size and market capitalization, its growth rates are generally lower than the peer group average, which could impact its future market share and competitive position.

7. Potential for Investment:

   • TJX presents a mixed investment case. Its dominant market position, strong cash flow, and efficient capital management are attractive features.
   • However, its slower growth rates and lower gross profit margin compared to some peers are potential concerns.
   • The higher valuation metrics suggest that the market already recognizes TJX's strengths, which may limit potential upside.

8. Key Risks and Considerations:

   • TJX's lower gross profit margin compared to some peers could indicate potential inefficiencies in its cost of goods sold or pricing strategies.
   • Its slower growth rates compared to the peer group average could impact its future market share and competitive position.
   • Its lower liquidity ratios compared to some peers could pose challenges in meeting short-term obligations.

9. Overall Assessment:

   • TJX is a financially sound company with a dominant market position, strong cash flow generation, and efficient capital management.
   • However, its slower growth rates, lower gross profit margin, and lower liquidity ratios compared to some peers are areas that warrant attention.
   • Investors should carefully weigh these factors and consider their investment goals and risk tolerance before making a decision.