TJX TJX Companies
Best-in-class off-price compounder, but the price already assumes most of its steady excellence.
The story
TJX is the dominant global off-price apparel and home retailer (T.J. Maxx, Marshalls, HomeGoods, Winners, TK Maxx). Its moat comes from buying scale, deep vendor relationships and a treasure-hunt format that takes share in both strong and weak consumer environments. It is a mature compounder that still has store runway in the US and internationally, and it gains share when department stores and weaker specialty retailers retreat.
Growth of about 6.5% matches the 5-year CAGR and planned store additions. Margin settles near 12.5%, slightly below the TTM 13%, because freight and inventory tailwinds may partly reverse. Sales-to-capital is trimmed from 4.78 to 4.0 because international expansion is more capital-intensive. Beta is below 1 because off-price is countercyclical, and the 10-year horizon reflects a durable but not unlimited moat.
Value drivers
| Revenue growth (Y1) | 6.5% |
| Terminal growth | 3.5% |
| Forecast horizon | 10y |
| Target operating margin | 12.5% |
| Years to target margin | 3 |
| Sales-to-capital | 4.00 |
| Beta | 0.90 |
| Failure probability | 1.0% |
| Cost of capital (WACC) | 9.2% |
| Terminal WACC | 9.6% |
Valuation bridge
| PV of explicit FCFF | 42.79B |
| PV of terminal value | 51.74B |
| Equity value | 96.91B |
| ÷ shares → per share | $87.73 |
Projected free cash flow to the firm
| Yr | Revenue | Growth | Margin | NOPAT | Reinvest | FCFF | PV |
|---|---|---|---|---|---|---|---|
| 1 | 66.42B | 6.5% | 12.8% | 6.42B | 1.01B | 5.41B | 4.95B |
| 2 | 70.51B | 6.2% | 12.7% | 6.73B | 1.02B | 5.70B | 4.78B |
| 3 | 74.63B | 5.8% | 12.5% | 7.02B | 1.03B | 5.99B | 4.60B |
| 4 | 78.73B | 5.5% | 12.5% | 7.41B | 1.03B | 6.38B | 4.49B |
| 5 | 82.80B | 5.2% | 12.5% | 7.79B | 1.02B | 6.77B | 4.36B |
| 6 | 86.80B | 4.8% | 12.5% | 8.17B | 1.00B | 7.17B | 4.22B |
| 7 | 90.71B | 4.5% | 12.5% | 8.53B | 976.49M | 7.56B | 4.08B |
| 8 | 94.48B | 4.2% | 12.5% | 8.89B | 944.85M | 7.95B | 3.93B |
| 9 | 98.11B | 3.8% | 12.5% | 9.23B | 905.48M | 8.33B | 3.77B |
| 10 | 101.54B | 3.5% | 12.5% | 9.55B | 858.43M | 8.70B | 3.60B |
Key risks
- Inventory availability tightens if full-price retailers manage supply better, compressing merchandise margins
- Tariffs and wage/freight inflation squeeze a thin-margin model
- International segments (TJX International, Canada) stay structurally lower-margin and dilute returns
Catalysts
- Department store closures and retail bankruptcies expand closeout supply and share gains
- Continued pretax margin expansion guidance and steady buybacks