Consumer Discretionary Select Sector

S&P 500

The Balanced Allocator

**Comparable Companies - TJX**

No comparable companies met the required quality threshold for inclusion. The peer identification process uses a multi-factor scoring model to ensure relevance, assessing both quantitative metrics (sector, industry, market cap) and a qualitative, AI-driven analysis of core business descriptions. While potential candidates were reviewed, none were deemed sufficiently similar for a direct valuation comparison.

Comparable Companies - TJX

The insider summary records 10 discretionary purchases and 10 discretionary sales in the last 12 months. The most recent short interest figure shows 1.1% of float as of 2026-02-13. The primary institutional holders are BlackRock, Vanguard, State Street, FMR and Geode Capital Management.

DIRECTOR

CEO & PRESIDENT

SEVP, GROUP PRESIDENT

Employment agreement extended through January 2028 as of February 2025.

Chief Executive Officer and President

Promoted to CFO at the start of FY24; continues to lead global finance and capital allocation as of March 2026.

Senior Executive Vice President and Chief Financial Officer

Executive Chairman

Maintains oversight of international and domestic segments as of March 2026.

Senior Executive Vice President and Group President

Maintains leadership of Marmaxx and HomeGoods segments as of March 2026.

Appointed Chief Operating Officer of Vertex Pharmaceuticals while maintaining his TJX board seat.

Independent Director

Continues as Lead Independent Director following re-election in June 2025.

Lead Independent Director

Ernie Herrman

John Klinger

Carol Meyrowitz

Alan Bennett

Charles Wagner Jr.

Ernie Herrman represents the pinnacle of 'homegrown' retail leadership, having spent over 35 years at TJX. His tenure as CEO has been defined by the successful scaling of the off-price model into a $60 billion global enterprise. His provenance is rooted in deep merchandising expertise, which has allowed TJX to maintain positive comparable store sales growth even during volatile retail cycles. Under his leadership, the company has balanced aggressive store expansion (targeting 7,000 stores globally) with disciplined capital returns, solidifying his reputation as a steady, growth-oriented allocator.

New Stock Repurchase Program Authorization

Alan Bennett's provenance is that of a 'stabilizer' and financial disciplinarian. His experience as a CEO and CFO in the financial and healthcare sectors provides him with a unique lens on risk oversight and capital structure. At TJX, his role as Lead Independent Director is critical in balancing the influence of long-tenured executives. His history of executing complex divestitures and cost-reduction programs at H&R Block demonstrates a proven ability to prioritize shareholder value over organizational complexity.

Divestiture of Financial Advisory Business

Charles Wagner Jr. brings a 'high-growth' financial pedigree to the TJX board. His current dual role as COO and CFO of Vertex Pharmaceuticals, a leader in precision medicine, provides TJX with expertise in managing rapid scaling and complex global supply chains. His provenance is marked by a transition from traditional finance roles (Bain, Coopers & Lybrand) to executive leadership in high-margin, high-innovation sectors. This experience is particularly valuable for TJX as it navigates international expansion and digital infrastructure investments.

Amy Lane

C. Kim Goodwin

David Ching

José Alvarez

Rosemary Berkery

Jackwyn Nemerov

Off-price retailer operating Ross Dress for Less and dd's DISCOUNTS stores, offering branded apparel and home goods at discounts.

Moderately-priced merchandise for lower to moderate income households

Off-price retailer offering apparel and home goods at discounted prices, operating Burlington stores.

Membership warehouse club offering a limited selection of bulk goods at low prices.

Warehouse operations in the United States

Warehouse operations in other international markets

General merchandise retailer with store and digital channels, focusing on differentiated owned brands and guest experience.

TJX leases virtually all of its >5,000 store locations worldwide and operates a network of distribution and fulfillment centers covering approximately 30 million square feet across six countries. The company owns and leases a combined 3.7 million square feet of office space, primarily in the United States. Property, plant and equipment (net) totaled $17,965 million at fiscal year end.

TJX exemplifies a Mature_Compounder with 4.5% YoY revenue to $58.98B, stable 11.3% operating margin, 30.9% gross margin, 17.4% ROIC exceeding 9% cost of capital, and 125% cash conversion funding $2B CapEx, $9.8B buybacks, and $7.1B dividends amid 141% Debt/Equity comfortably covered at 52.5x interest. The management team excels in capital allocation discipline (score 3) via positive incremental ROIC and self-funded returns but is adequate across alignment (score 2, insider net selling), track record (score 2, internal focus), and governance (score 2, basic structure), rendering it a reliable but not exceptional steward capable of sustaining compounding if tariff mitigation holds.

TJX is subject to environmental regulations and risks, including those related to climate change, energy use, waste management, deforestation, biodiversity, and chemical management. Compliance with laws and regulations is required, and failure could result in legal proceedings, fines, penalties, and reputational harm. Risks also arise from supply chain impacts and product safety concerns.

As of February 1, 2025, TJX had approximately 364,000 Associates, with 86% working in retail stores. Many Associates work less than 40 hours per week. Unionization exists in U.S. and Canadian distribution centers, and works councils operate in Europe.

TJX faces risks related to product quality, safety, and compliance with governmental regulations. Authorities regulate merchandise quality and safety, and non-compliance could lead to product recalls, fines, penalties, and litigation. TJX relies on vendors for compliance but may bear responsibility for product safety laws and labeling requirements.

TJX conducts a Global Social Compliance Program, auditing over 3,300 factories in nearly 30 countries in FY25. The company supports over 2,500 nonprofit organizations globally through foundations. Responsible sourcing is a corporate responsibility pillar, with risks including supply chain disruptions, ethical sourcing concerns, and human rights issues in sourcing regions.

Revenue is expanding 4‑5% YoY to $58.9 bn, operating margin is flat at ~11.3%, gross margin has risen only 30 bps to 30.9%, cash conversion is 125% of net income, and leverage remains high at Debt/Equity ≈ 141%.

The FY2026 Q4 transcript outlines a $2.2‑$2.3 bn CapEx plan for 146 net new stores, 540 remodels and distribution upgrades; FY2025 disclosures referenced $2.1‑$2.2 bn for 130 net new stores, remodels and relocations, confirming a consistent reinvestment cadence.

No material impairment charges were disclosed in the FY2025 or FY2026 material‑events appendices, and the auditor did not flag asset impairment as a Critical Audit Matter, suggesting the book values are reliable.

The ROIC performance stems from the same margin levers discussed earlier—shrink, freight savings and efficient store expansion—highlighted in FY2026 Q4 and FY2025 Q4 transcripts; no value‑destructive acquisitions occurred.

2.250% senior unsecured notes due September 2026

1.150% senior unsecured notes due May 2028

3.875% senior unsecured notes due April 2030

1.600% senior unsecured notes due May 2031

4.500% senior unsecured notes due April 2050

2026 senior unsecured revolving credit facility

2028 revolving credit facility (originally 2024 facility)

P/FCF

Ernie L. Herrman

President and Chief Executive Officer of H&R Block, Inc., Interim CEO of H&R Block, Senior Vice President and CFO at Aetna Inc., various senior financial management roles, experience in finance and sales/marketing.

Alan M. Bennett

Amy B. Lane

Executive Chairman of the Board, extensive knowledge of TJX business, broad experience in off-price retail including innovation, business strategy, supply chain, distribution and logistics, marketing, real estate, finance and accounting, and international operations.

Executive Vice President and Chief Financial Officer of Vertex Pharmaceuticals, experience in accounting, finance, internal controls, information technology and systems, business growth and strategy, compliance and risk assessment.

Charles F. Wagner, Jr.

David T. Ching

José B. Alvarez

Rosemary T. Berkery

Kenneth Canestrari

Douglas Mizzi

Jackwyn L. Nemerov

All Directors and Executive Officers as a Group

Douglas W. Mizzi

Election of the 10 directors named in the proxy statement

Ratification of appointment of PricewaterhouseCoopers as TJX's independent registered public accounting firm for fiscal 2026

Advisory approval of TJX's executive compensation (say-on-pay)

Chief Executive Officer, President & Director

Senior Executive Vice President & Chief Financial Officer

Senior EVP & Group President

The TJX Companies, Inc. is the leading off-price apparel and home-fashions retailer in the United States and worldwide. It operates over 5,000 stores across four reportable segments-Marmaxx, HomeGoods, TJX Canada and TJX International-and six e-commerce sites, offering a rapidly changing assortment of brand-name merchandise at prices generally 20% to 60% below full-price retailers.

U.S. segment operating TJ Maxx, Marshalls, tjmaxx.com and marshalls.com (including Sierra).

U.S. segment operating HomeGoods and Homesense stores and e-commerce sites.

Canadian segment operating Winners, HomeSense and Marshalls stores.

International segment operating TK Maxx, Homesense and related e-commerce sites in Europe, Australia and the Middle East.

Held base case revenue growth forecast, base case terminal multiple of 20.0x, and WACC of 9.0% constant; solved backward for Year 5 margin required to justify current stock price of 159.505.

Balance Sheet - Supplemental

Balance Sheet

Cash Flow Statement - Supplemental

Cash Flow Statement

Income Statement - Supplemental

Income Statement

Ratios

Valuation

Historical Ratios & Multiples - TJX

Apparel retail faces tariff headwinds and e-commerce pressure, but TJX outperforms with 5% Q4 comps vs sector softness, lower-income demographics leading transactions.

Recent conservative FY2027 guidance (2-3% comps) and stock slip 1.3% post-earnings highlight tariff scrutiny now.

Tariff escalation forcing margin disclosure. Validates bear thesis if offsets fail, as 30bps TTM gain suggests vulnerability despite claims.

TJX generates $4.42B TTM FCF at 7.5% margin from $58.98B revenue but trades at 40.6x despite insider net selling $14.2M and recent buybacks at poor 26/100 timing scores averaging $139; tariff pressures risk 50bps gross margin compression beyond shrink/freight benefits, eroding ROIC from 22.7%; downside protected by bear DCF floor of $92.31 assuming permanent moat fade.

Moat erosion from tariff escalation impairing pricing power and ROIC.

Insider selling accelerating amid valuation stretch.

Stewardship adequate (overall score 2/3) with strong capital returns but undermined by net insider selling $14.2M and poor recent buyback timing (26/100); reliable for compounding if risks contained, but alignment concerns cap conviction.

Liquidation value analysis is not relevant for the company's archetype ('Mature_Compounder') and was not performed.

TJX Companies reports Q2 FY25 results with 4% comp store sales growth and raises full-year guidance

TJX Companies reports Q3 FY23 results with 11.2% pretax margin and raises Q4 FY23 outlook

Market/Sector Move +5.59%

Market/Sector Move +7.12%

TJX Companies reports Q1 FY22 results with 16% open-only comp store sales growth and $.44 EPS

TJX Companies reports Q2 FY22 results with 20% open-only comp store sales growth and $.64 EPS

TJX price target raised to $185 from $165 at BTIG

TJX price target raised to $193 from $181 at UBS

TJX price target raised to $170 from $155 at Bernstein

TJX price target raised to $168 from $165 at Baird

TJX price target raised to $150 from $145 at Wells Fargo

TJX initiated with a Buy at Guggenheim

TJX price target raised to $172 from $168 at Barclays

TJX price target raised to $165 from $162 at Evercore ISI

The TJX Companies (TJX) PT Raised to $170 at Jefferies

TJX price target raised to $155 from $152 at Bernstein

UBS Reiterates Buy Rating on The TJX Companies (TJX)

TJX price target raised to $140 from $130 at Wells Fargo

TJX initiated with a Buy at BTIG

Situation: Current price is $159.5 versus fair value $133.25 (-16.5% expected return), and valuation confidence is stable. Debate: Bull case depends on Tariff escalation forcing margin disclosure. Bear case centers on Moat erosion from tariff escalation impairing pricing power and ROIC. Conclusion: Recommendation is Sell with no position, pending a materially better risk/reward setup.

Executive Summary

TJX generates $4.42B TTM FCF at 7.5% margin from $58.98B revenue but trades at 40.6x despite insider net selling $14.2M and recent buybacks at poor 26/100 timing scores averaging $139; tariff pressures risk 50bps gross margin compression beyond shrink/freight benefits, eroding ROIC from 22.7%; downside protected by bear DCF floor of $92.31 assuming permanent moat fade.<ul><li>Driver: Overvaluation relative to sustainable FCF at 7.5% margin and ROIC trajectory</li><li>Catalyst: Tariff escalation exposing incomplete offsets as evidenced by 30bps gross margin gain despite full mitigation claims</li><li>Protection: Bear case DCF of $92.31 per share modeling moat erosion</li></ul>Our variant perception is based on time arbitrage. The market is pricing the stock for sustained above-average returns on capital given 22.7% ROIC and 17.4% historical average, whereas our analysis of limited pricing power (30bps gross margin gain despite tariff offsets) and insider net sales of $14.2M suggests returns fade faster, justifying a 16% discount to current levels.This is a short or avoid position predicated on mean reversion in valuation multiples from elevated 40.6x FCF amid execution risks in tariff mitigation and capital allocation timing.

Core Investment Rationale

TJX operates as an off-price retailer of apparel, home fashions, and accessories across Marmaxx (T.J. Maxx and Marshalls), HomeGoods, TJX Canada, and TJX International segments, generating $58.98B TTM revenue through a treasure-hunt model emphasizing opportunistic buying, flexible supply chains, and value pricing to drive 4-5% comp sales from transaction growth. Strategy focuses on global expansion to 7,000 stores including recent entry into Spain, 130-150 net new stores annually, 500+ remodels, and maintaining broad demographic appeal via fresh merchandise flow and gifting initiatives, supported by $2.2-2.3B FY2027 CapEx. Revenue quality evidenced by 125% cash conversion ($6.42B NCFO vs $5.12B net income) and stable 11.3% operating margins.Core assets include a global store base exceeding 5,300 locations with strong brands like T.J. Maxx (1,284 US stores), Marshalls (1,148 US), HomeGoods (850 US), and international banners; proprietary vendor relationships enable treasure-hunt inventory turns; distribution network supports rapid replenishment. Intangible moat from off-price model switching costs and data-driven allocation, with inventory at $9.35B (per-store up 10% YoY) ensuring marketplace availability.TJX leads fragmented off-price apparel retail with no direct peers meeting quality thresholds; outperforms full-price competitors via value gap, capturing share from transaction growth across demographics; risks from e-commerce and low-cost entrants mitigated by physical treasure-hunt experience.TJX has demonstrated consistent execution as a mature compounder, growing revenue 4.5% YoY to $58.98B TTM with stable 11.3% operating margins and ROIC averaging 17.4% over 4.8 years, funding $9.8B buybacks (reducing shares 7.6% CAGR) and $7.1B dividends from $23.3B operating cash flow without debt issuance. Key moves include international expansion (618 T.K. Maxx in Europe, 68 in Australia) and steady store growth (~3% YoY), with EPS up 140.5% CAGR driven 40,357bps by profits and 789bps by share reduction; recent context features conservative FY2027 guidance of 2-3% comps and $2.5-2.75B buybacks amid tariff pressures.

Business & Situation

<ul><li>Bull Case: Durable moat from treasure-hunt model drives 4-5% comps and 17.4% ROIC exceeding 9% WACC; strong cash conversion 125% funds returns; analyst targets average $182 implying 14% upside.</li><li>Bear Case: Tariff offsets incomplete (30bps gross margin gain vs claims); insider net sales $14.2M including CEO $12.6M; elevated 40.6x FCF multiple vs DCF fair value $133; deteriorating buyback timing to 26/100.</li></ul>Consensus views TJX as a resilient compounder gaining share via value proposition, with 6/8 Buy ratings and targets to $193 (UBS +25%), pricing in 4-5% growth and margin stability despite tariffs. Stock near 52-week high $162.68 reflects optimism on global expansion to 7,000 stores.Apparel retail faces tariff headwinds and e-commerce pressure, but TJX outperforms with 5% Q4 comps vs sector softness, lower-income demographics leading transactions.The market is overly focused on short-term comp momentum (5% Q3/Q4) while underappreciating tariff execution risks (gross margin +30bps only) and insider selling signaling moat fragility; high 40.6x FCF discounts durability less than our DCF implying 16% downside.Bulls overstate moat persistence given partial tariff offsets and net insider sales $14.2M; bears correctly highlight valuation stretch at 23.8x EV/EBITDA vs 20x terminal, driving Sell with $133 target.Our analytical edge comes from a deeper appreciation of tariff shortfalls (30bps margin vs full offset claims) and insider incentives (CEO sales $12.6M), leading us to believe the market underestimates ROIC fade risk despite stable historical 11.3% margins.

Core Thesis

CEO Ernie Herrman (tenure 9 years) oversaw 17.4% ROIC and 4.5% revenue CAGR but recent insider sales total $14.2M net including his $12.6M across 95k+ shares, reducing holdings 4.6-5.3%.Strong historically with $9.8B buybacks at average ROI 73.5% early (95/100 scores) yielding 16.2% net yield, but recent $502M at $139 (26/100 score) and $160M issuances show declining skill; no M&A.Transcripts candid on shrink (20bps benefit) and freight savings but overstate tariff offsets given 30bps gross margin gain; guidance hit EPS 95% of 19 quarters.<ul><li>Board Independence: Standard independence inferred with no CEO/Chair overlap noted</li><li>Chairman/CEO Roles: Separate</li><li>Chairman Tenure: Not disclosed</li><li>Insider Ownership: CEO holds 510k shares post-sales</li><li>Shareholder Rights: Consistent buybacks reducing shares 7.6% CAGR</li></ul>Stewardship adequate (overall score 2/3) with strong capital returns but undermined by net insider selling $14.2M and poor recent buyback timing (26/100); reliable for compounding if risks contained, but alignment concerns cap conviction.

Leadership & Governance

The valuation floor is anchored to the Bear Case DCF value of $92.31, which models a permanent erosion of the company's moat, 100bps margin compression to 10.3%, and revenue growth slowdown to 1.35% amid tariff escalation.Base case projects 3.35-5.46% revenue growth blended from consensus and model, margins stable at 11.3-11.5% from shrink/freight, yielding $121.69 per share at 20x terminal.Bull case accelerates growth +150bps to 5.85% Y1 and margins to 12.3% via store expansion, reaching $149.44 Blue-Sky Potential at 22x terminal.Bear case assumes tariff erodes margins -100bps to 10.3% and growth -200bps to 1.35%, yielding $92.31 floor value at 18x terminal modeling moat decline.

Valuation Context

<ul><li>Tariff escalation forcing margin disclosure. Validates bear thesis if offsets fail, as 30bps TTM gain suggests vulnerability despite claims.</li><li>TJX generates $4.42B TTM FCF at 7.5% margin from $58.98B revenue but trades at 40.6x despite insider net selling $14.2M and recent buybacks at poor 26/100 timing scores averaging $139; tariff pressures risk 50bps gross margin compression beyond shrink/freight benefits, eroding ROIC from 22.7%; downside protected by bear DCF floor of $92.31 assuming permanent moat fade.</li><li>Recent conservative FY2027 guidance (2-3% comps) and stock slip 1.3% post-earnings highlight tariff scrutiny now.</li></ul>Recent conservative FY2027 guidance (2-3% comps) and stock slip 1.3% post-earnings highlight tariff scrutiny now.

Catalyst Path & Context

<ul><li>Moat erosion from tariff escalation impairing pricing power and ROIC. Gross margin +30bps only vs full offset claims; inventory +14% YoY.</li><li>Insider selling accelerating amid valuation stretch. Net $14.2M sales LTM; CEO $12.6M at $116-151.</li><li>Stewardship adequate (overall score 2/3) with strong capital returns but undermined by net insider selling $14.2M and poor recent buyback timing (26/100); reliable for compounding if risks contained, but alignment concerns cap conviction. Risk monitor: Current price $159.5 vs fair value $133.25, expected return -16.5%.</li></ul>

Primary Risks

<ul><li>Entry Target: No new entries: recommendation is Sell.</li><li>Stop Loss: No stop-loss needed because recommendation is Sell (no position).</li><li>Position Size: Position size is None under current recommendation and risk constraints.</li><li>Time Horizon: N/A for a Sell recommendation.</li></ul><ul><li>FY2027 guidance assumes offset; Q4 transcript stresses vendor flexibility.</li><li>Monitoring trigger: Current price $159.5 vs fair value $133.25, expected return -16.5%.</li><li>Gross margin +30bps only vs full offset claims; inventory +14% YoY.</li></ul>Sustained gross margin expansion >50bps YoY confirming full tariff offsets and moat durability. Also require valuation reliability to improve before re-entering.

Actionable Parameters & Monitoring

TJX appears overvalued (fair value $133.25 vs current $159.5, expected return -16.5%). Recommendation: Sell; do not allocate until valuation and risk profile reset.

Final Conclusion

Overvaluation relative to sustainable FCF at 7.5% margin and ROIC trajectory

Driver

Tariff escalation exposing incomplete offsets as evidenced by 30bps gross margin gain despite full mitigation claims

Catalyst

Bear case DCF of $92.31 per share modeling moat erosion

Protection

Durable moat from treasure-hunt model drives 4-5% comps and 17.4% ROIC exceeding 9% WACC; strong cash conversion 125% funds returns; analyst targets average $182 implying 14% upside.

Bull Case

Tariff offsets incomplete (30bps gross margin gain vs claims); insider net sales $14.2M including CEO $12.6M; elevated 40.6x FCF multiple vs DCF fair value $133; deteriorating buyback timing to 26/100.

Bear Case

Situation: Current price is $159.5 versus fair value $133.25 (-16.5% expected return), and valuation confidence is stable. Debate: Bull case depends on Tariff escalation forcing margin disclosure. Bear case centers on Moat erosion from tariff escalation impairing pricing power and ROIC. Conclusion: Recommendation is Sell with no position, pending a materially better risk/reward setup.

The strategy evolved from an aggressive, store-count-driven expansion narrative focused on capturing market share from competitor closures (FY2025) to a more mature, balanced approach emphasizing profitable growth, operational flexibility, and shareholder returns while still pursuing global footprint expansion (FY2026). The initial 'growth-at-all-costs' tone shifted to 'profitable growth with flexibility' as external pressures like tariffs emerged.

Method	Implied Value	Weight	Weighted Value
DCF	$121.28	50%	$60.64
Comps	$145.17	30%	$43.55
Historicals	$145.27	20%	$29.05
Total Weighted			$133.25

TJX

Company Overview

Price History