TJX Companies Remains Committed to Boosting Shareholder Value
The TJX Companies, Inc. TJX regularly enhances shareholder value through dividend payouts and share buybacks. While most of the retailers are losing their market share to the online buying craze, discount retailer TJX Companies is one of those few retailers who have managed to stay afloat amid troubled waters of the sector.
The board of directors of the company recently approved a quarterly dividend hike of 20% to 31.25 cents per share. The new dividend will be payable on Jun 1 to shareholders of record as of May 11. The raise brings the annualized dividend to $1.25 per share, implying an increase from the previous annualized rate of $1.04 per share. The new annualized dividend yields an impressive 1.6% based on TJX Companies’ closing price of $76.71 as of Apr 4. The recent announcement reflects the company’s strong cash position.
Notably, this was the 21st consecutive dividend hike by TJX Companies since the initiation of its quarterly dividend program. Over this period, the company’s dividend has grown at a compound annual rate of 23%. In addition, the company has planned approximately $1.3 to $1.8 billion of share repurchases for fiscal 2018. Last year, the company hiked its dividend by 24% to 26.04 cents per share and also announced a new $1.5–$2 billion share buyback authorization.
The company has a solid cash position. At the end of Jan 28, 2017, cash and cash equivalents were $2.92 billion compared to $2.38 billion as of Oct 29, 2016, while long-term debt was $2.22 billion at the end of the fourth quarter, almost on par with previous quarter. Moreover, in the reported quarter, the leading off-price retailer paid $2.4 billion to shareholders in fiscal 2017 through share repurchases and dividends.
Solid Earnings Trend
The company’s earnings beat in the trailing four quarters with an average earnings surprise of 5.29%.
TJX Companies, Inc. (The) Price, Consensus and EPS Surprise
TJX Companies, Inc. (The) Price, Consensus and EPS Surprise | TJX Companies, Inc. (The) Quote
In the recently concluded fourth-quarter fiscal 2017, net sales, comparable store sales (comps) and earnings exceeded expectations. We note that its sales boosting initiatives along with an aggressive store opening strategy in the pipeline holds it in good stead. Further, the company has undertaken several initiatives to augment online sales and to rejuvenate its loyalty program for 2017.
Analysts are also optimistic about the company’s performance as evident from the fact that estimates have been rising over the past 30 days period. While estimates for the fiscal 2018 went up 0.26% to $3.91 per share, that of fiscal 2019 went up 0.24% to $4.18 per share.
Shares of TJX Companies rallied 2.97% in the past six months, outperforming the Zacks categorized Retail-Discount & Variety industry which witnessed a gain of just 0.63% in the same time frame, owing to the company’s solid fundamentals and strategic initiatives.
However, TJX Companies has been struggling with lower margins in the past few quarters, mainly due to higher wage expenses. Furthermore, the off-price nature of the company prevents it from raising prices in order to maintain margins.
Nevertheless, we believe these difficulties are transitory and there is room for further upside which is also evident from its VGM score of ‘A’ and long-term earnings growth rate of 10.70%.
The TJX Companies currently carries a Zacks Rank #3 (Hold).
Key Picks from the Sector
Investors interested in the broader retail space may consider Burlington Stores Inc. BURL, Foot Locker, Inc. FL and The Children's Place, Inc. PLCE. While Children’s Place and Burlington sport a Zacks Rank #1 (Strong Buy) and have long-term earnings growth of 8.00% and 15.85%,respectively, Foot Locker carrying a Zacks Rank #2 (Buy), has growth rate of 9.71%. You can seethe complete list of today’s Zacks #1 Rank stocks here.
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