Expect Earnings Growth, Estimate Beats To Continue For TJX Companies

Wedbush’s Morry Brown believes the robust fourth-quarter results and FY 2017 guidance have set the stage for TJX Companies Inc TJX to post another beat and raise year.

The analyst maintains an Outperform rating on the company, with a price target of $85.

“We remain constructive on TJX for 2017, with FY guidance once again looking beatable and secular market share gains continuing to drive a significant divergence between TJX’s comps relative to full price peers,” Brown mentioned.

Solid Q4

TJX Companies reported its Q4 EPS at $1.03, ahead of the consensus and the guidance range, while same store sales increased 3 percent during the quarter, again beating the guidance.

The analyst believes that the key drivers for the company during Q4:16 were the same as those seen through 2016, with traffic being attributed for a majority of the comp increase across all major divisions.

“TJX’s top growth priority remains increasing traffic at both domestic and international stores and executives highlighted progress being made with millennials,” Brown stated.

Related Link: Is TJX Companies Immune To What Ails Mall Retailers?

Guidance

For 2017, the company expects new unit growth to accelerate to 7 percent, with 250 new stores planned.

For Q1, TJX Companies guided to EPS of $0.76–$0.78, modestly below consensus but in line with the company’s “traditional conservative posture,” the analyst noted.

Same store sales guidance was for +0–1 percent, with the conservatism reflecting tough weather compares.

In addition, TJX Companies announced plans for a second home concept, beyond Home Goods, although it did not provide any specific details.

The EPS estimate for 2017 has been raised from $3.93 to $4.04.