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The TJX Companies (TJX) Readies for Q1 Earnings: Things to Note

The TJX Companies, Inc. TJX is likely to register top-and-bottom-line growth when it reports first-quarter fiscal 2024 earnings on May 17. The Zacks Consensus Estimate for revenues is pegged at $11,823 million, suggesting an increase of 3.7% from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for the bottom line has remained unchanged in the past 30 days at 71 cents per share. The projection indicates growth of 4.4% from the year-ago quarter’s earnings.

The TJX Companies has a trailing four-quarter earnings surprise of roughly 6%, on average. The off-price retailer’s earnings came in line with the consensus mark in the last reported quarter.

We expect first-quarter revenues to increase 3.3% to $11,778.1 million and the bottom line to rise 2.2% to 69 cents.

The TJX Companies, Inc. Price, Consensus and EPS Surprise

The TJX Companies, Inc. price-consensus-eps-surprise-chart | The TJX Companies, Inc. Quote

Factors to Consider

TJX has been gaining from strength in the Marmaxx segment. In the fourth quarter of fiscal 2023, U.S. comp store sales grew 7% in Marmaxx, buoyed by solid apparel and accessories categories’ sales. Customer traffic remained the key driver behind comp store sales growth, with the average basket size also increasing. We believe that the continuation of these trends is likely to have aided the company’s overall sales in the quarter under review. However, the HomeGoods (U.S.) division has been seeing soft sales for the past few quarters.

The TJX Companies has been benefiting from its solid store and e-commerce growth efforts. The company has been witnessing solid demand for an in-person shopping experience in the last few years. Further, with an 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.

These upsides bode well for the quarter to be reported. For the first quarter, comp store sales are expected to have risen 2-3% and consolidated sales are expected to have increased 3-4% to the $11.7-$11.8 billion band.

Apart from this, The TJX Companies has been seeing growth in its pretax profit margin. For the first quarter of fiscal 2024, management anticipates a pretax profit margin in the range of 9.2-9.5%, which suggests an increase from the 7.5% reported in the first quarter of fiscal 2023.

However, the company has also been witnessing incremental wage costs and supply-chain costs. On its last earnings call, management stated that it expects high wage and supply-chain costs to remain hurdles in fiscal 2024, which may have persisted in the first quarter as well.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for The TJX Companies this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is not the case here.

The TJX Companies has a Zacks Rank #2 and an Earnings ESP of -0.70%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With the Favorable Combination

Here are three companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Walmart WMT currently has an Earnings ESP of +0.49% and a Zacks Rank #3. The company’s bottom line is expected to remain flat year over year when it reports first-quarter fiscal 2023 results. The Zacks Consensus Estimate for quarterly earnings per share is pegged at $1.30. You can see the complete list of today’s Zacks #1 Rank stocks here.

Walmart’s top line is expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $148.6 billion, which suggests a rise of almost 5% from the figure reported in the prior-year quarter. WMT delivered an earnings beat of 6.5%, on average, in the trailing four quarters.

Deckers Outdoor Corporation DECK currently has an Earnings ESP of +7.36% and a Zacks Rank of 3. DECK is likely to register a top-line decline when it reports fourth-quarter fiscal 2023 results. The Zacks Consensus Estimate for revenues is pegged at $703.6 million, suggesting a dip of 4.4% from the prior-year quarter’s reported figure.

The Zacks Consensus Estimate for Deckers’ quarterly earnings has increased from $2.54 per share to $2.60 in the past 30 days. The estimate indicates growth of 3.6% from the figure reported in the prior-year quarter. DECK has a trailing four-quarter earnings surprise of nearly 31%, on average.

lululemon athletica LULU currently has an Earnings ESP of +1.28% and a Zacks Rank of 3. LULU is expected to register a top-and-bottom-line improvement when it reports first-quarter fiscal 2023 numbers.

The Zacks Consensus Estimate for lululemon’s quarterly revenues is pegged at $1.9 billion, calling for growth of 19.5% from the prior-year quarter’s reported figure. The Zacks Consensus Estimate for the quarterly EPS of $1.93 suggests growth of 30.4% from the figure reported in the year-ago fiscal quarter. LULU has a trailing four-quarter earnings surprise of 6.8%, on average.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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