The TJX Companies Inc (TJX)

Conclusion

The TJX Companies is a US off-price retailer of apparel and home fashions, operating through the Marmaxx, HomeGoods, TJX Canada and TJX International segments. At a price of 138.13 USD on 2026-11-09, its market capitalisation is 151.9 billion USD.

The verdict is fair. The fair value band runs from 102.33 to 153.50 USD with a midpoint of 127.92 USD, giving a margin of safety of -7.4%. The discounted cash flow gives 124.93 USD per share, and the fair value from historical multiples is 130.91 USD. Against their own ten-year medians, the price-to-earnings ratio is 25.0 against 24.1, and the enterprise value to EBITDA is 17.7 against 16.1. The reverse DCF implies 9.3% annual growth, below the 13.4% revenue growth delivered over five years.

The case rests on a return on invested capital of 32.2% against a WACC of 8.4%, free cash flow conversion of 96.9% over the last twelve months, and an interest coverage of 108.1. The weakest numbers are a quick ratio of 0.56, a current ratio of 1.15 flagged as watch, and a price-to-sales ratio of 2.44 against a ten-year median of 1.76. A slowdown in revenue growth or margins would test a valuation that already sits close to the fair value midpoint.

Financial health

Financial strength is green, held up by an Altman Z-score of 6.29, net debt to EBITDA of 0.92 and interest coverage of 108.1. The current ratio of 1.15 is neutral, and the quick ratio of 0.56 and debt to equity of 1.34 are weaker points. The Altman Z-score sits in the safe zone, although that model was designed for manufacturers and TJX is a retailer. Insolvency risk: low, about 0.7% by the estimate of the Ohlson model over one to two years, based on the January 2026 statements. The company's current and quick ratios are the figures to monitor, since both are low for a company holding this much inventory and debt.

Earnings quality

Earnings quality is green, supported by free cash flow conversion of 96.9% over the last twelve months and a Piotroski score of 7 out of 9. The five-year average conversion is 83.7%, and the accrual ratio of -4.1% means cash generation has kept pace with reported earnings. Stock-based compensation is 0.36% of revenue, and free cash flow after it is 5.65 billion USD. The share count has fallen by 1.5% a year over five years, which reflects buybacks. The Beneish M-score is not available. TJX beat earnings estimates in all eight of the last eight quarters, with an average surprise of 7.4%, and current-year estimates have been revised up 16 times against 2 downgrades in the last 30 days.

Profitability

Profitability is green. The operating margin of 12.8% sits above its ten-year median of 10.8%, and the net margin of 9.7% is above its median of 7.6%. The gross margin of 32.1% compares with a median of 28.7%. Return on invested capital of 32.2% against a WACC of 8.4% gives a spread of 23.8 percentage points, which means the business creates value well above its cost of capital. The DuPont split shows return on equity of 57.0% is driven mainly by leverage, with an equity multiplier of 3.51, net margin of 9.1% and asset turnover of 1.69. Return on equity should therefore be read with that leverage in mind.

Growth

Growth is green. Revenue has compounded at 6.5% over three years, 13.4% over five years and 6.9% over ten years. Revenue grew in 9 of the last 10 years. Earnings per share compounded at 18.0% over three years and at 11.4% over ten years. The five-year earnings figure of 131.1% a year is very high and should not be read as a trend. Free cash flow per share grew 25.1% a year over three years but only 5.9% a year over five. Analysts expect earnings per share to grow 9.8% next year.

Valuation

Valuation is yellow, as the verdict is neutral with a margin of safety of -7.4%. Against ten-year medians, the price-to-earnings ratio of 25.0 is a premium of 4.0% over its median of 24.1, the enterprise value to EBITDA of 17.7 is a premium of 9.6% over 16.1, and the price-to-sales ratio of 2.44 is a premium of 38.3% over 1.76. The price to free cash flow of 25.9 is a discount of 3.5% against a median of 26.8. The discounted cash flow gives 124.93 USD per share at a discount rate of 8.87%, and 58.8% of its value sits in the terminal value. The fair value band is built on fixed assumptions, including a 5% equity risk premium and capped growth, and is not a price target. The reverse DCF implies 9.3% growth against 13.4% revenue growth over five years. The dividend yield is 1.3% and the payout on free cash flow is 33.2%.

Risks

The quick ratio of 0.56 and the current ratio of 1.15 leave little liquidity cushion if inventory or payables move against the company. Debt to equity of 1.34 means a fall in earnings would weigh more heavily on equity. The price-to-sales ratio of 2.44, well above its ten-year median of 1.76, shows the market is paying for the current margin structure. If operating margin returned toward its median of 10.8%, the earnings base supporting the valuation would shrink. The Beneish M-score is not available, and the five-year earnings growth figure is too distorted to rely on. This analysis does not include a debt maturity schedule or revenue by segment, so refinancing risk and the contribution of each division cannot be assessed.