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Quote this valuation with its source: Fair value, Potential value and the price at analysis.
FAQ
TJX — frequently asked questions
Is The TJX Companies, Inc. overvalued?
In our latest published analysis dated 2026-09-26, TJX screens modestly overvalued. The price recorded at analysis is USD 130 versus our fair value of USD 112; the high endpoint is presented separately as potential value of USD 134. That implies roughly 13.7% downside to fair value at that date.
Our latest published report, analyzed 2026-09-26, gives TJX a fair value of USD 112 and a potential value of USD 134. The conclusion is triangulated across multiple valuation models and weighted by reliability for The TJX Companies, Inc.'s archetype; it is a dated research output, not a live price.
Should I buy TJX now?
Our latest published rating for TJX, analyzed 2026-09-26, is Reduce. The TJX Companies, Inc. screens modestly overvalued at the analysis-date price of USD 130 versus fair value of USD 112; potential value is USD 134. This is research for educational purposes, not personalized investment advice.
What are the biggest risks for TJX?
The dedicated bear-case section in our report analyzed 2026-09-26 documents The TJX Companies, Inc.'s material risks, evidence, thresholds, and thesis-invalidation conditions. Scenario-specific explanations remain in that section so the report does not repeat or decontextualize them elsewhere.
What is TJX's rating?
Our latest published rating for TJX, analyzed 2026-09-26, is Reduce, with a published moat assessment of 7.5/10 (Narrow). It reflects our fair value of USD 112, the potential value of USD 134, and the price recorded at analysis (USD 130).
Accelerated footprint retrenchment and store closures among department store peers, enabling HomeGoods (7% Q2 comp sales) and Canadian operations ($757M operating profit) to gain outsized market share, lifting FY2028 revenue toward consensus of $68.04B and unlocking our Potential value high-end scenario of $133.51.
Main risk
Operating margin contraction driven by persistent merchandise assortment errors or Q3 comp sales missing guided 2%-3%.
We rate The TJX Companies Inc. (TJX) a Reduce. At the analysis price of $130.06 as of September 25, 2026, the stock trades at a 15.9% premium to our Fair value of $112.24, offering -13.7% expected downside, while sitting close to our Potential value ceiling of $133.51. While TJX possesses a narrow economic moat supported by massive purchasing scale and Marmaxx's 15.11% segment margins, its current valuation of 24.94x forward P/E leaves investors exposed to execution missteps and retail multiple derating.2,4,8
The investment committee assigns The TJX Companies Inc. (TJX) a Reduce rating. As of September 25, 2026, TJX traded at $130.06, representing a 15.9% premium to our compositeFair value of $112.24 (-13.7% downside) and approaching the Potential value boundary of $133.51. Intrinsic value is anchored by our primary discounted earnings model midpoint of $131.95 and forward earnings model midpoint of $89.22, supplemented by multi-stage moat fade ($122.65), owner earnings ($106.96), and sum-of-the-parts ($106.09). While sell-side 12-month consensus targets average $169.80 (discounted to $156.99 present value at an 8.16% cost of equity), our analysis reveals that current market pricing leaves no margin of safety against macro retail headwinds.1
Operationally, TJX continues to demonstrate narrow-moat fundamentals. Consolidated FY2026 revenue reached $60.37B with operating income of $7.18B, driven by the core Marmaxx cash engine generating $5.53B in operating profit at a 15.11% segment margin. Supported by a network of over 1,300 buyers sourcing opportunistic closeouts across 21,000 vendors, TJX maintains lean inventory with per-store inventory up only 2%. Furthermore, HomeGoods achieved 7% comp store sales growth in Q2 aided by competitor department store retrenchment, and TJX Canada expanded market share to deliver $757M in operating profit. These cash streams funded $4.92B in FY2026 free cash flow and consistent share repurchases.2,4,5,6,7,8
Despite these qualitative strengths, downside risks have intensified. Management confirmed self-inflicted merchandise assortment errors in TJ Maxx and Marshalls that resulted in customer transaction declines, while Q3 comp sales guidance moderated to 2%-3%. Additionally, early-year fuel hedge benefits will flip into negative cost drags over subsequent quarters. At a 24.94x forward P/E multiple, any persistent transaction weakness or gross margin compression below the guided 31.2%-31.3% level threatens substantial valuation derating toward broader retail industry norms. Consequently, we advise reducing position sizing.4,5
Unrivaled Purchasing Scale and Vendor Flexibility
With $60.37B in consolidated revenue and more than 1,300 buyers sourcing from 21,000 global vendors, TJX commands premier off-price inventory access without advance purchase commitments.4,5
Highly Profitable Marmaxx Cash Generation Engine
The core Marmaxx banner delivered $5,528M in operating income on $36,585M in revenue (15.11% margin) in FY2026, funding robust share buybacks and self-funding global growth.7,8
Consistent Free Cash Flow Generation and Market Share Gains
House recommendation
Reduce. TJX is an exceptional off-price retailer with durable procurement advantages across 21,000 vendors and robust annual free cash flow of $4.92B. However, the market currently prices in near-flawless execution at 24.94x forward earnings. With Q3 comp sales guidance moderating to 2%-3% amid self-inflicted merchandise assortment errors in TJ Maxx and Marshalls, risk-reward is unfavorable at $130.06. Investors should reduce exposure toward our Fair value of $112.24.4,5,6
Company overview
Its mission is to deliver great value to its customers every day. In its stores and online, the company offers consumers its value proposition of brand, fashion, price and quality. Its opportunistic buying strategies and flexible business model differentiate us from traditional retailers. The TJX Companies, Inc. offers its customers a rapidly changing selection of merchandise to create a treasure hunt experience in its stores and to encourage frequent customer visits. To achieve this, the company seeks to turn the inventory in its stores rapidly, regularly offering fresh selections of apparel and home fashions at excellent values.
The TJX Companies, Inc. operates with a low cost structure compared to many traditional retailers with a prudent focus on expenses throughout its business. Its advertising is generally focused on promoting its retail banners rather than individual products, which contributes to its advertising budget (as a percentage of sales) remaining low compared to many traditional retailers. The TJX Companies, Inc. designs its stores to provide a pleasant, convenient shopping environment without spending heavily on store fixtures.
Under our macro retail stress test, TJX is evaluated against a concurrent macroeconomic contraction and merchant assortment impairment. When consumer discretionary spending contracts, foot traffic across apparel retail falls while promotional discounting across department stores narrows the relative value proposition of off-price closeouts. If merchandise assortment execution issues at T.J. Maxx and Marshalls persist alongside the reversal of fuel hedge mark-to-market tailwinds, operating margins compress by 300 basis points from guided levels of 12.0%-12.1% toward historical cyclical troughs of 9.10%-9.45% observed in FY2022-FY2023. On consolidated annual revenue of $60,372M, a 300 basis point margin contraction eliminates approximately $1.81B in annual operating income from FY2026's $7,178M baseline. Furthermore, elevated capital expenditures of $1,957M (3.24% of revenue) —double the industry capex/revenue benchmark of 1.6% —would compress free cash flow conversion from $4,917M toward $3.1B, constraining share buybacks and forcing valuation derating from 24.94x toward the historical off-price baseline of 17.6x-18.0x.
The TJX Companies Inc. maintains a defensible narrow economic moat rooted in procurement scale advantages, an expansive physical store and logistics network, and long-standing merchant relationships with over 21,000 vendor partners. In the off-price retail segment, success depends upon securing branded inventory at steep discounts and rapidly distributing items across an agile store base to create a compelling in-store treasure-hunt experience. TJX's merchant team of more than 1,300 buyers operates globally without purchase commitments, taking advantage of apparel cancellations, order imbalances, and closeouts. This scale generates a durable sourcing barrier that smaller retailers and pure-play e-commerce merchants cannot easily replicate.
Despite this robust procurement apparatus, the moat is bounded by competitive and operational realities that preclude a wide moat designation. Direct peer Ross Stores achieves superior gross margins of 33.39% compared to TJX's 31.0%-31.2% and higher operating margins of 13.58% versus TJX's 11.89%-12.09%, reflecting Ross's lower supply chain complexity and domestic focus. Furthermore, TJX remains vulnerable to merchant assortment execution missteps. As CEO Ernie Herrman confirmed during the second-quarter earnings call, self-inflicted execution issues and merchandise mix errors in TJ Maxx and Marshalls directly caused customer transaction declines. Because scale does not eliminate merchant forecasting errors, TJX's competitive advantage is appropriately rated Narrow with a score of 7.5.
The highlighted cell is Fair value when every assumption sits at its base level ($112.24). Each row and column shows what Fair value becomes when one assumption moves.
Upgrade the rating; Verify whether customer transaction volume growth drove the beat rather than ticket inflation, check inventory turnover across apparel banners, and evaluate whether the share price narrows its distance toward $112.24 before adjusting portfolio weighting.
Trigger: Comparable store sales growth exceeding the upper boundary of guided quarterly expectations, accompanied by diluted earnings per share above quarterly guidance and operating margin expansion.
An earnings beat demonstrating immediate resolution of assortment execution issues in core apparel banners would alleviate concerns regarding foot traffic deceleration and support valuation stabilization toward $133.51.
In-line
Maintain Reduce; Maintain disciplined portfolio limits, monitor comparable store sales trajectory against off-price peers, and withhold capital deployment until market price converges toward $112.24.
Trigger: Diluted earnings per share and comparable store sales meeting the midpoint of quarterly with stable .
Industry capex-to-depreciation stands at 1.65x with capex-to-revenue at 1.6%. TJX's capex is $1,957M in FY2026 against depreciation of $1,247M (1.57x capex-to-D&A) and capex-to-revenue of 3.24% on $60,372M revenue, reflecting elevated investment in regional processing centers and international retail fleets.4,5,7
Bull cycle
During cyclical expansions, off-price retail benefits from high consumer trade-down traffic, widespread department store closures that release market share, and abundant excess inventory from brand manufacturers seeking discreet liquidation channels without brand impairment.
Bear cycle
In downcycles, macroeconomic weakness suppresses overall apparel transaction volumes. Furthermore, aggressive promotional clearance and store liquidation sales by struggling full-price department stores and specialty retailers temporarily narrow the price advantage of off-price merchants, while wage inflation and freight costs compress toward cyclical lows.
§11 Position management
Sizing
0-1%
With the committee maintaining a Reduce rating and TJX trading at $130.06, a 15.9% premium to our Fair value midpoint of $112.24, portfolio exposure should be minimized to 0-1% of equity assets. Capital preservation takes precedence over compounding until valuation realigns with intrinsic cash earnings power.4
Risk
Risk management under a Reduce recommendation emphasizes capital preservation and avoidance of multiple compression risks. TJX's valuation at 24.94x forward P/E leaves little margin of safety if merchandise mix errors in TJ Maxx and Marshalls persist or if Q3 comp store sales growth (guided 2%-3%) fails to reaccelerate. Sizing should be capped at 0-1%, trailing stops kept at 5%, and quarterly checkpoints strictly enforced against margin degradation.
§12 Investor perspectives
Value-Oriented Investor
Avoid
Shares trade at an elevated 24.94x forward P/E and a 15.9% premium to intrinsic Fair value of $112.24, offering zero margin of safety against potential retail multiple derating toward historical averages of 18.0x-22.0x.4
Quality Compounder / Long-Term Growth Investor
Hold
TJX commands an unrivaled procurement moat across 21,000 vendors and generates $4.92B in free cash flow, but the share price of $130.06 as of September 25, 2026 approaches the Potential value boundary of $133.51, suggesting future returns will lag business earnings compounding until entry multiples improve.
§14 Final recommendation
Action
Reduce
We recommend reducing equity exposure to The TJX Companies Inc. (TJX). Trading at $130.06 as of September 25, 2026, the stock carries an expected return of -13.7% relative to our compositeFair value of $112.24, while hovering near our Potential value ceiling of $133.51. At 24.94x forward earnings, current valuation overstates near-term growth visibility and leaves no buffer against execution risks.4
While TJX's procurement network of 21,000 vendors and Marmaxx's 15.11% operating margin ($5,528M EBIT) confirm a narrow moat, recent self-inflicted merchandise assortment errors have triggered customer transaction declines in core US banners. With Q3 comp sales decelerating to 2%-3% and fuel hedge benefits expiring, toward historical peer norms poses asymmetric downside risk.
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Sources
The records this analysis drew on, as they stood when it was run.
Analyst consensusData as of 2026-09-26 · Published 2026-09-26 · Provider-adjusted · cited for 2 figuresCited in Executive summary, Final recommendation
TJX generated $4,917M in free cash flow in FY2026 while expanding market share across Canada and HomeGoods (7% comp growth) as full-price department store competitors retrench.5,6,8
Capital allocation requires higher defensive reinvestment, curtailing share repurchase activity.
In the bear case, macroeconomic headwinds and discretionary spending fatigue weaken foot traffic across retail banners. Assortment missteps in domestic apparel linger, forcing promotional price discounting that impairs gross margins. Higher wage expenses, expiring fuel hedge benefits, and international store drag compress operating profitability. Comp sales growth turns stagnant, while market multiples derate toward historical retail averages.
Ways this thesis can break
Severe merchandise margin erosion from retail price competition and freight inflation
Operating margin was historically as low as 9.30%-9.45% in FY2022-FY2023. If merchandise mix errors and expiring fuel hedge benefits force retail price markdowns, operating margins will drop 300 bps below guided 12.0%-12.1%, driving a -24.8% fair value impact.5
TJX currently trades at an elevated forward P/E of 24.94x. A 20% derating from the 22.0x exit multiple toward 17.6x reflects broader cyclical peers such as MCD at 17.05x, producing an authenticated midpoint of $89.22 in the forward earnings model and an -18.5% fair value impact.3,4
Near-term consensus projects 6.06%-6.26% revenue growth, but Q3 comp sales guidance decelerated to 2%-3% amidst transaction declines. A 5 percentage point drag over 5 years slows top-line compounding toward 1.26%, creating a -22.3% fair value impact.5
FV impact
-2.4%
Revenue and EPS growth 5 points lower for five years
Trigger
Within 24 months
Full retail bear case with compounding macro deceleration and margin pressure
Bear scenario models persistent consumer weakness decelerating EPS growth to 4.0% with exit P/E derating to 18.0x, consistent with post-earnings consensus estimate downward revisions across FY2027 and FY2028, driving a -31.2% fair value impact.
FV impact
-2.2%
The analyst's bear scenario path and multiple as the base case
Trigger
Within 24 months
Early-warning signals to monitor
The five developments that would weaken our investment case.
Merchandise procurement buying power erosion or aggressive retail price-matching against competitors such as Ross Stores (gross margin 33.39%), signaling impairment of core off-price purchasing cost advantages.
Current:31.2%-31.3% (guided full-year FY2027)
Alert if<30.5% over two consecutive fiscal quarters
Persistent merchandise assortment execution issues in core US apparel retail forcing promotional markdowns and weakening the primary operating cash engine of the consolidated group.
TJX generates exceptional return on invested capital of 44.44%, substantially exceeding its computed weighted average cost of capital of 7.81% (derived from moderate Ke of 8.16%, 5.11% risk-free rate, 4.14% equity risk premium, and 0.7372 adjusted beta). This economic profit spread of over 3,600 basis points is supported by $6,874M in operating cash flow and $4,917M in free cash flow in FY2026, confirming that the firm captures significant economic rent above its cost of financing.2,6,7
7.5/ 10
Narrow
Sources of advantage
01Scale Advantage and Procurement Sourcing Network — Consolidated annual revenue of $60,372M in FY2026 and a merchant buyer organization of over 1,300 professionals sourcing opportunistically across 21,000 global vendors provide unrivaled off-price purchasing scale and inventory access without long-term supply commitments.Wide
02Distribution Infrastructure and Store Fleet Network — A dedicated physical store footprint across prime suburban shopping centers combined with state-of-the-art regional distribution and processing centers supported by $1,957M in FY2026 capital expenditures creates steep logistical barriers to entry for potential off-price retail competitors.Moderate
03Brand Equity and Vendor Channel Relationships — Over four decades of vendor goodwill allows brand apparel and home goods manufacturers to liquidate surplus inventory discreetly through TJX without public promotional advertising, protecting primary brand equity while assuring TJX a steady pipeline of premier merchandise.Moderate
Direct peer retail footprint expansion and competition for branded closeout inventory from Ross Stores
medium
12 to 24 months
Unrivaled procurement scale of over $60B revenue and global vendor relationships insulate merchandise access, though Ross Stores maintains higher domestic gross margins (33.39%).4
Merchant execution missteps and merchandise assortment mix errors depressing store customer traffic
medium
6 to 12 months
Executive intervention and category rebalancing across buyer groups to correct self-inflicted merchandise assortment errors identified in TJ Maxx and Marshalls.5
Supply chain freight inflation and reversal of fuel hedge mark-to-market gains
low
6 to 12 months
Rapid inventory turnover enables ticket repricing to absorb input costs, though mark-to-market fuel hedge benefits from Q1 turn into negative headwinds across the back half of the fiscal year.5
The base case represents the modal expected compounding path. Consolidated revenue grows at 4.5% to 5.5% annually, anchored by Marmaxx same-store sales growth of 3% to 4% and disciplined store expansion across Europe and Canada. Operating margins normalize around 12.0% in line with management guidance. Free cash flow conversion remains robust, supporting ongoing dividend growth and share repurchases at approximately 1% annually, aligning with our Fair value midpoint of $112.24.5,7,8
Share repurchases steadily reduce diluted share count on an ongoing annual basis.
In the bull case, off-price retail captures accelerated market share from accelerated department store closures and competitor rationalization. HomeGoods maintains elevated comparable sales growth, while international banners achieve rapid scale and margin expansion. Top-line revenue expands at accelerated rates with operating margins reaching peak levels, driving robust earnings growth and valuation multiple expansion toward historical peaks.5
Meeting quarterly targets without upside acceleration leaves the shares trading at an elevated premium to Fair value $112.24, offering insufficient valuation support relative to $130.06.
Miss
Downgrade the rating; Accelerate exposure reduction, evaluate vulnerability in inventory per store, and monitor clearance markdowns across apparel banners.
Earnings quality remains robust, anchored by operating cash flow consistently outpacing GAAP net income. Free cash flow conversion demonstrates clean cash realization with minimal reliance on non-cash adjustments or aggressive capitalization. Inventory is carried conservatively on a rolling retail method with prompt clearance of slow-moving items, and stock-based compensation remains a modest fraction of cash earnings, corroborating high-integrity reported profitability.6,7
Metrics to watch into the print
01
Metric:
Customer transaction trends and comparable store sales in core domestic banners
CurrentManagement guided Q3 comp store sales growth below full-year expectations following acknowledged assortment missteps.
Why it matters
Assortment execution missteps in core banners previously depressed customer visits, making traffic recovery essential for top-line compounding.
02
Metric:
Merchandise gross margin and tariff cost absorption
CurrentManagement raised full-year gross margin expectations following favorable tariff benefits in the second quarter.
Why it matters
Gross margin reflects procurement purchasing power and the ability to absorb freight or input cost fluctuations without promotional discounting.
Capital allocation is disciplined and self-funding. In FY2026, $6,874M in operating cash flow funded $1,957M in capital expenditures ($1,370M maintenance / $587M growth), leaving $4,917M in free cash flow. Total debt of $14,317M carries a manageable 0.0906 debt weight and 5.65% pre-tax cost of debt. Share repurchases retired substantial equity, reducing diluted shares from 1,159M in FY2024 to 1,128M in FY2026 and toward guided 1.12B shares in FY2027, compounding per-share intrinsic value.
TJX generates an elite return on invested capital of 44.44%, reflecting exceptional inventory velocity, negative net working capital dynamics, and capital-light leased retail units. Operating margin stability (11.89% reported in FY2026 and guided 12.0%-12.1% in FY2027) sustains this return profile across the retail cycle.
ROIC of 44.44% vastly outpaces computed WACC of 7.81% (derived from moderate Ke of 8.16% and pre-tax debt cost of 5.65%), creating a substantial positive economic spread of over 36 percentage points.
Marmaxx segment generates over three-quarters of consolidated operating profit with premium 15%+ margins.
Marmaxx generated $5,528M in operating income on $36,585M revenue in FY2026 (15.11% margin), representing 77.0% of consolidated operating profit of $7,178M.
Group operating performance is heavily concentrated in domestic US apparel retail, meaning that any merchant assortment mix misstep in T.J. Maxx or Marshalls immediately impacts consolidated profit compounding.
TJX generates surplus distributable cash flow after fully funding organic store rollout and supply chain automation, providing reliable annual share buyback compounding of ~1%.
International operations carry significantly lower operating margins than domestic banners.
TJX International delivered $558M in operating profit on $7,986M sales (6.99% margin), compared to Marmaxx at 15.11% and TJX Canada at 13.45% ($757M on $5,629M).
Faster square footage growth in international territories exerts a structural mathematical drag on consolidated margins until local scale and distribution density mature.
The TJX Companies Inc. (TJX) trades at 24.9x forward earnings against a peer median of 21.3x. Its EV/EBITDA of 17.0x compares with a peer median of 17.8x. The comparison uses 4 peers: Ross Stores Inc., Booking Holdings Inc., McDonald's Corporation and Airbnb Inc., as of 2026-09-26.
Department Store Footprint Contraction and Banner Closures
positive
Accelerating closures and floor space reductions of legacy department store chains across North America permanently transfer market share to agile off-price concepts such as T.J. Maxx, Marshalls, and HomeSense.
Consumer Trade-Down and Value-Seeking Behavior
positive
Cumulative inflation across non-discretionary categories prompts middle- and high-income shoppers to trade down into off-price retail channels, expanding customer demographic breadth and visit frequency.
Physical Treasure-Hunt Resilience vs E-Commerce Disruption
neutral
While e-commerce expands across standardized retail categories, off-price apparel and home goods remain insulated due to the serendipitous in-store treasure-hunt discovery dynamic and the unfavorable unit economics of shipping low-ticket, single-item closeouts.
Positioning
TJX occupies the clear global scale leadership position in off-price apparel and home fashions, generating $60,372M in FY2026 revenue. However, direct peer Ross Stores (ROST) demonstrates superior capital efficiency and margin performance, posting gross margins of 33.39% and operating margins of 13.58%, compared to TJX's 31.0%-31.2% gross margin and 12.0%-12.1% guided operating margin. While TJX possesses greater geographic diversification through Canada ($5,629M sales) and International ($7,986M sales), international margins (6.99%) lag domestic core profitability, requiring ongoing execution discipline.4,5,8
Entry tranches
Level
Action
Why
$112.24 (Fair Value Midpoint)
Initiate initial monitoring and neutral portfolio weighting consideration
Represents composite intrinsic fair value midpoint where current earnings yield and 10-year compounding compensate for off-price retail execution risks.
Accumulate and establish active overweight long exposure
Anchors the lower boundary of our intrinsic valuation range, pricing in a 22.0x exit multiple contraction and providing a robust margin of safety against macro retail shocks.
Exit tranches
Level
Action
$130.00 to $133.51 (Fair Value High / Current Trading Range)
Trim 50% to 75% of residual long holdings and reallocate capital into undervalued compounders
$135.00+ (Elevated Premium Range)
Fully exit position and close remaining holdings
Quarterly checkpoints
Metric
Threshold
Action
Comparable Store Sales Growth
<2.0% in any single fiscal quarter
Demote growth outlook, reduce forward EPS projections, and accelerate position trimming.
The dividend is exceptionally secure, funded by $6,874M in operating cash flow and modest leverage, but risk of capital losses from multiple contraction outweighs near-term yield.2,7
Not every cited input appears here: internal calculations and intermediate model outputs have no external record, and some citations could not be matched to one.
Alert if>3.8% annually without top-line revenue acceleration
