The TJX Companies Earnings: Here’s Why Investors are Bidding Up Shares

The TJX Companies, Inc. (NYSE:TJX) delivered a profit and beat Wall Street’s expectations, AND beat the revenue expectation. The revenue beat is a positive sign to shareholders seeking high growth out of the company. Shares are up 1.8%.

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The TJX Companies, Inc. Earnings Cheat Sheet

Results: Net income increased to $461.5 million (62 cents per diluted share) in the quarter versus a net gain of $406.49 million in the year-earlier quarter.

Revenue: Rose 10.65% to $6.41 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations

The TJX Companies, Inc. reported adjusted net income of 62 cents per share. By that measure, the company beat the mean analyst estimate of $0.61. It beat the average revenue estimate of $6.39 billion.

Quoting Management

Carol Meyrowitz, Chief Executive Officer, commented, “We are extremely pleased that our strong momentum continued in the third quarter, demonstrating once again the power of TJX to post strong sales and profit margin gains on top of strong year-over-year comparisons. Our 17% increase in earnings per share and 7% consolidated comparable store sales growth both significantly exceeded our original expectations and every division delivered excellent performance. Customer traffic was up at all divisions in the U.S., Canada and Europe and drove the comparable store sales increases, which we believe is a great indicator of the staying power of our value proposition on exciting fashions and brands. At this time, we are raising our full-year guidance.”

Key Stats

Revenue increased 7.81% from $5.95 billion in the previous quarter. Net income increased 9.6% from $421.09 million in the previous quarter.

Fourth Quarter and Full Year Fiscal 2013 Outlook

For the fourth quarter of Fiscal 2013, the Company expects diluted earnings per share to be in the range of $.72 to $.75, which would represent a 16% to 21% increase over $.62 per share last year. This outlook is based upon estimated consolidated comparable store sales growth of flat to 2%. The Company’s fourth quarter guidance includes an expected $.07 per share benefit from the 53rd week in the Company’s Fiscal 2013 calendar. Excluding this benefit, the adjusted guidance in the range of $.65 to $.68 represents a 5% to 10% increase over the prior year.

For the fiscal year ending February 2, 2013, the Company is raising its guidance for diluted earnings per share by$.01. The Company now expects diluted earnings per share for the full year to be in the range of $2.45 to $2.48, compared with $1.93 on a reported basis in Fiscal 2012. This guidance represents a 23% to 25% increase over the prior year’s adjusted earnings per share from continuing operations of $1.99 (detailed below) and is now based upon estimated consolidated comparable store sales growth of 5% to 6%. In addition, the Company’s full-year guidance includes the $.03 per share negative impact from the third quarter items discussed above.

The Company’s full-year guidance also includes an expected $.07 per share benefit from the 53rd week in the Company’s Fiscal 2013 calendar. Excluding this estimated benefit, the adjusted guidance in the range of $2.38 to $2.41 represents a 20% to 21% increase over the prior year’s adjusted earnings per share.

The Company’s earnings guidance for the fourth quarter and full year Fiscal 2013 assumes that currency exchange rates will remain unchanged from current levels.

Analysts Looking Forward

Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings is a profit of $0.76 and has not changed. For the current year, the average estimate has moved up from a profit of $2.46 to a profit of $2.49 over the last ninety days.

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(Company fundamentals provided by Xignite Financials.)

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