TJX Companies (TJX): Exploring Valuation as Shares Outperform Market Over the Past Three Months

TJX Companies (TJX) shares have gained almost 3% in the past month, while some investors watch for signals about consumer spending trends. Recent performance puts the retailer’s returns well ahead of the S&P 500 over the past 3 months.

See our latest analysis for TJX Companies.

TJX Companies’ share price momentum has picked up over the past year, reflecting improving sentiment around retail and consumer spending. The latest share price sits at $142.49. With a 1-year total shareholder return of 25.4%, recent gains point to a strong run that outpaces many peers and hints at growing investor confidence in the company’s strategy.

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With shares reaching new highs and solid gains over the past year, the key question now is whether TJX Companies’ current price still leaves room for upside or if the market has already factored in all future growth.

Most Popular Narrative: 4.7% Undervalued

The current narrative points to a fair value for TJX Companies that is just ahead of its latest share price, implying only a narrow discount. The recent gain reflects optimism, yet the narrative supports a valuation only moderately above where the stock trades now.

Management emphasized robust merchandise availability due to excess inventory in the market, which allows TJX's experienced global buying teams to secure quality branded goods at favorable prices. This should underpin higher gross margins and mitigate cost pressures, supporting stronger future earnings.

Read the complete narrative.

What is driving the positive outlook? The narrative’s confidence hangs on a handful of bold operating targets: margin acceleration, expanding earnings, and a profit multiple that rivals some of the fastest-growing names in retail. Want to know which of these ambitious projections truly power the fair value? The details might surprise you.

Result: Fair Value of $149.44 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing shifts toward e-commerce and rising labor costs could challenge TJX Companies’ momentum and may affect future growth if not managed well.

Find out about the key risks to this TJX Companies narrative.

Another View: Market Multiples Tell a Different Story

Looking at the market’s preferred ratio, price-to-earnings, TJX Companies trades at 31.9x earnings, which is significantly higher than both the industry average of 17.2x and the peer average of 19.2x. The fair ratio for TJX is estimated at 21x, much lower than where shares trade now. This suggests that, by this measure, the stock is priced at a premium and could be exposed to downside if sentiment shifts. Could these multiples signal caution, even as growth continues?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own TJX Companies Narrative

If you see the numbers differently or want to dig in on your own terms, you can build your own narrative from scratch in just a few minutes, then Do it your way

A good starting point is our analysis highlighting 2 key rewards investors are optimistic about regarding TJX Companies.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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