TJX Companies and Ross Stores: How Their Valuations Stack Up

12-month forward PE

As of April 26, TJX Companies (TJX) was trading at a 12-month forward PE ratio of 21.1x compared to Ross Stores’ (ROST) valuation of 21.8x. TJX Companies’ EPS (including the impact of lower taxes and the additional week in fiscal 2018 but excluding the Sierra impairment charge recorded in fiscal 2018) grew 22.7% to $2.43 in fiscal 2019. The company’s fiscal 2019 sales grew 8.7%.

Ross Stores’ adjusted EPS grew 25.5% to $4.19 in fiscal 2018. The company’s earnings growth was driven by sales growth of 6.0% and lower taxes.

TJX Companies and Ross Stores: How Their Valuations Stack Up

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Analysts’ expectations

Analysts expect TJX Companies’ adjusted EPS to rise 7.4% to $2.61 in fiscal 2020, which ends on February 1, 2020. The bottom line growth is likely to be driven by revenue growth of about 6.0% to $41.3 billion. TJX Companies expects its fiscal 2020 EPS in the range of $2.55 to $2.60.

For Ross Stores, analysts expect adjusted EPS to rise 7.9% to $4.52 in its fiscal 2019, which ends on February 2. Analysts expect Ross Stores’ fiscal 2019 sales to rise 6.1% to $15.9 billion. Ross Stores expects its fiscal 2019 EPS in the range of $4.30 to $4.50. The profitability of both TJX Companies and Ross Stores is expected to be under pressure due to increased wages and higher freight costs.

The EPS in the current fiscal year for TJX Companies and Ross Stores is expected to be enhanced by the impact of lower average share count as a result of share repurchases. TJX Companies repurchased 51.8 million shares for $2.5 billion in fiscal 2019. As of the end of fiscal 2019, $1.7 billion was remaining under TJX Companies’ stock repurchase program. In February 2019, TJX Companies’ board of directors approved a new repurchase program that allows for the repurchase of an additional $1.5 billion of the company’s common stock.

In its fiscal 2018, Ross Stores repurchased 12.5 million shares for an aggregate price of $1.08 billion. Ross Stores’ board of directors approved a new buyback program that allows stock repurchase of $2.55 billion over the next two fiscal years.