TJX trades at $133.24 per share and has stayed right on track with the overall market, gaining 5.9% over the last six months. At the same time, the S&P 500 has returned 5.4%.

Is now the time to buy TJX? Find out in our full research report, it’s free.

Why Does TJX Stock Spark Debate?

Initially based on a strategy of buying excess inventory from manufacturers or other retailers, TJX (NYSE: TJX) is an off-price retailer that sells brand-name apparel and other goods at prices much lower than department stores.

Two Positive Attributes:

1. Surging Same-Store Sales Show Increasing Demand

Same-store sales show the change in sales for a retailer's e-commerce platform and brick-and-mortar shops that have existed for at least a year. This is a key performance indicator because it measures organic growth.

TJX’s demand has been spectacular for a retailer over the last two years. On average, the company has increased its same-store sales by an impressive 4.4% per year.

2. Economies of Scale Give It Negotiating Leverage with Suppliers

With $56.99 billion in revenue over the past 12 months, TJX is a behemoth in the consumer retail sector and benefits from economies of scale, giving it an edge in distribution. This also enables it to gain more leverage on its fixed costs than smaller competitors and the flexibility to offer lower prices. However, its scale is a double-edged sword because there is only so much real estate to build new stores, placing a ceiling on its growth. To expand meaningfully, TJX likely needs to tweak its prices or enter new markets.

One Reason to be Careful:

Long-Term Revenue Growth Disappoints

Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Regrettably, TJX’s sales grew at a tepid 6.3% compounded annual growth rate over the last six years. This wasn’t a great result compared to the rest of the consumer retail sector, but there are still things to like about TJX.

Final Judgment

TJX’s positive characteristics outweigh the negatives, but at $133.24 per share (or 29.2× forward P/E), is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.

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