Is TJX Companies Stock Underperforming the S&P 500?

The TJX Companies, Inc. (TJX), headquartered in Framingham, Massachusetts, operates as an off-price apparel and home fashions retailer. With a market cap of $147.9 billion,  the company operates off-price retail concepts and e-commerce sites in the U.S., Canada, and Europe that offer a wide range of brand name and designer merchandise.

Companies worth $10 billion or more are generally described as “large-cap stocks,” and TJX definitely fits that description, with its market cap exceeding this threshold, reflecting its substantial size, influence, and dominance in the apparel retail industry. TJX has cemented its leadership in off-price retail by leveraging strong vendor relationships and efficient procurement to offer branded merchandise at significantly lower prices than traditional channels. Its treasure-hunt shopping experience, driven by a diverse and ever-changing assortment, continues to resonate with cost-conscious consumers and build a loyal customer base, while strategic investments in Multibrand Outlet Stores in Mexico and Brands for Less in the Middle East underscore its focus on international expansion and geographic diversification.

Despite its notable strength, TJX slipped 21.6% from its 52-week high of $170, achieved on Jun. 11. Over the past three months, TJX stock declined 12.8%, underperforming the S&P 500 Index’s ($SPX) marginal gains during the same time frame.

Shares of TJX fell 13.2% on a YTD basis and dipped 2.4% over the past 52 weeks, notably underperforming SPX’s YTD gains of 11.5% and 18.1% returns over the last year.

To confirm the bearish trend, TJX has been trading below its 200-day moving average since late August. The stock has been trading below its 50-day moving average since late June, with some fluctuations.

TJX’s recent pullback appears to reflect elevated expectations rather than underlying weakness. Softness in the core Marmaxx division weighed on sentiment and the near-term outlook, but that was offset by broad-based strength across HomeGoods, TJX Canada and TJX International, prompting management to accelerate its store expansion plans. Importantly, the company also delivered margin improvement across the board, highlighting that the underlying business remains solid despite the mixed segment performance.

On Aug. 19, TJX shares closed down more than 4% after reporting its Q2 results. Its adjusted EPS of $1.22 beat Wall Street expectations of $1.18. The company’s revenue was $15.2 billion, topping Wall Street forecasts of $15.1 billion. The company expects full-year adjusted EPS in the range of $5.15 to $5.20.

In the competitive arena of apparel retail, Ross Stores, Inc. (ROST) has taken the lead over the stock, with a 27.3% gain on a YTD basis and a 55.8% uptick over the past 52 weeks. 

Wall Street analysts are bullish on TJX’s prospects. The stock has a consensus “Strong Buy” rating from the 23 analysts covering it, and the mean price target of $171.18 suggests a potential upside of 28.4% from current price levels.