Strong track record
TJX Companies (TJX) exceeded analysts’ earnings expectations in all the quarters of fiscal 2016 and fiscal 2017. The company is expected to announce its fiscal 1Q18 results on May 16. Analysts expect the company’s fiscal 1Q18[1. Fiscal 1Q18 ended on April 29, 2017] adjusted EPS to rise 3.9% to $0.79.
Recap of past earnings
In fiscal 4Q17, which ended on January 28, 2017, TJX Companies delivered adjusted EPS of $1.03, beating the consensus analyst estimate of $1.00. The company’s 4Q17 adjusted EPS grew 4.0% on a year-over-year basis, primarily due to higher sales. However, the 4Q17 EPS growth was adversely impacted by 3.0% due to higher wages and 5.0% due to currency headwinds.
In February 2017, the company said that it expects its fiscal 1Q18 EPS in the $0.76 to $0.78 range, compared to $0.76 in fiscal 1Q17. This guidance takes into account a 3.0% negative impact of higher wages on earnings growth. The guidance also includes a 6.0% favorable impact of foreign currency and a 1.0% benefit related to an accounting change for share-based compensation.
Analysts expect TJX Companies’ peers Ross Stores (ROST) and Burlington Stores (BURL) to deliver adjusted EPS growth of 9.6% and 22.8%, respectively, in fiscal 1Q17, which ended on April 29, 2017, for these companies.
Let’s look at TJX Companies’ valuation multiple in the next part of this series.