TJX Stock Price Hits Fresh High, Signals More Highs to Follow

Key Points

• TJX stock price will trend higher over time, driven by its industry-leading growth and capital return.
• Analyst trends are robust and indicate that this stock is a Buy in 2025.
• Guidance is a leading indicator for this market, but it will likely be outperformed due to the consumer's persistent resilience.

TJX Companies NYSE: TJX stock price action following the Q2 earnings release is mixed, suggesting it could be time to sell this stock, but all other indications disagree. The chart price action includes a significant pre-market surge, a gap higher, and a subsequent intraday sell-off that left the market well off the highs.

The mid-day reversal is likely due to profit-taking; the gap up was worth more than 5% and longer-term gains are far more robust. 

The critical factor for technicians is the glaringly bearish candle and correspondingly high volume that presents significant overhang for the market. Offsetting factors include the company’s growth, outperformance, cash flow, guidance, and potential for guidance to be cautious.

On the flipside, the analyst trends are bullish, including increasing coverage, upgrades, a Buy rating, and a revision trend leading the stock price to the high-end range near $165. These trends are unlikely to end now that the Q2 results are in.

TJX Companies Is Positioned to Deliver in the Back Half of 2025

The TJX Companies' Q2 results proved a few things, including persistent resilience in the consumer and the strength of its retail position. It produced $14.4 billion in net revenue, growing by 6.9% compared to last year, outpacing the consensus estimate by 160 basis points, leading industry peers such as Target by 700 bps.

The strength was driven by a 4% increase in comp sales, with strength in all segments. The core Marmaxx segments, including TJMaxx, grew by 3%, Home Goods grew by 5%, TJXCanada by 9%, and the International business by 5%.

Margin news is also good. A robust inventory of fresh products and operational efficiencies complemented the favorable selling environment. The results include wider gross and operating margins, reduced SG&A, and accelerated profit growth.

The net result, including the impact of share repurchases, is a 15% increase in adjusted earnings per share or roughly $1.2 billion. The critical details include $1.8 billion in operating cash flow and an expectation for margin strength to persist. 

The guidance is among the details spurring the market to new highs.

As robust as Q2's growth was, a weak Q3 outlook would have likely capped gains. The takeaway is that comps for the year are expected to run near 3%, in alignment with prior forecasts, while the outlook for earnings was increased. 

The company expanded its adjusted EPS outlook to a low of $4.52, a 6% gain compared to the prior year. Once the final results are tallied, the forecast for the year will likely be viewed as cautious.

The Q2 activity also includes a substantial inventory build, which the company described as an excellent buying opportunity for quality branded merchandise, positioning itself for the fall season. 

TJX Delivers Value for Its Shareholders

TJX Companies does a good job of converting its inventory to cash and returning capital to shareholders. The capital return in Q2 consisted of the dividend and share repurchases, reducing the average count by 1.4%. 

The driving force behind share value is the company's ability to return capital while increasing its balance sheet value.

The balance sheet highlights include reduced cash offset by the inventory build, increased current and total assets, and a 13% rise in shareholder equity. 

Regarding the dividend, TJX's stock distribution annualizes to 1.25% as of mid-August and is expected to be increased at a double-digit pace for the foreseeable future. The payout from this Dividend Aristocrat is safe, as it is less than 40% of the earnings forecast, which is robust and improving by the quarter.