September 19, 2016

TJX Companies, Inc.

NYSE: TJX - Apparel/Footwear Retail

Grade Earnings Quick Facts

70.9 Last Earnings Release

Last Qtr. Actual vs. Est.

08/16/2016 Dividend Yield

$0.84 / $0.81 52 Wk High

1.26%

$82.87

Next Release 11/15/2016 N/A 52 Wk Low $64.21

$74.67
09/16/2016
Year Ending 01/31/2017 $3.48 Short Interest 1% of float
Rated 'BUY' since Nov 6th, 2007, when it
Year Ending 01/31/2018 $3.82 Market Cap $49.0B
was upgraded from 'HOLD'

Overview
Company Scores Very Good Fundamental Grades
MarketGrader currently has a BUY rating on TJX
Companies, Inc. (TJX), based on a final overall grade of
70.9 scored by the company's fundamental analysis.
TJX Companies, Inc. scores at the 97th percentile
among all 5888 North American equities currently
followed by MarketGrader. Our present rating dates to
November 6, 2007, when it was upgraded from a HOLD.
Relative to the Apparel/Footwear Retail sub-industry,
which is comprised of 41 companies, TJX Companies,
Inc.'s grade of 70.9 ranks fifth. The industry grade
leader is Foot Locker, Inc. (FL) with an overall grade of
77.4. Relative to recent market conditions the stock has
performed poorly in the last six months, down 3.18%
compared to 5.07% for the S&P 500 Index while better
than the Apparel/Footwear Retail sub-Industry, down
4.85%. Please go to pages two and three of this report
for a complete breakdown of TJX's fundamental
analysis.

Price, Rating and Sentiment History - 2 Years

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 September 19, 2016

TJX Companies, Inc.

NYSE: TJX - Apparel/Footwear Retail 70.9
While Not Entirely Negative, Growth Indicators Show Several Signs of
Growth B- Weakness
TJX Companies,'s latest financial report wasn't very encouraging from a
Market Growth LT C revenue growth perspective, extending an anemic growth record also
evident from a long term view. The company's total revenue last quarter
Market Growth ST B+was $7.88 billion, only 7.04% higher than the year earlier period's
EPS Growth A+revenue of $7.36 billion. In the 12 months ended also last quarter, TJX
Companies,'s total sales were $32.14 billion, a 20.07% rise from the
Growth Potential D $26.77 billion in revenue booked in the equivalent period ended three
years ago, a poor showing over such a long period of time. As such, any Revenue Qtrly. 07/31/2016 $7.9B
Earnings Momentum D boost to the company's bottom line will have to come from cutting costs, Revenue Qtrly. Year Ago $7.4B
suggesting it will be important for investors to watch closely the Revenue 1 Yr. Chg. 7.04%
Earnings Surprise B-company's margins in the next couple of quarters. It is also clear from its Revenue 12 Mo. Tr. Latest $32.1B
latest announcement that the company's profit growth is very weak both on a year-over-year basis and over a Revenue 12 Mo. Tr. 3Y Ago $26.8B
three year period. The three year comparison is based on full year results (rolling four quarters), including the Revenue 12 Mo. Tr. 3Y Chg. 20.07%
quarter just ended, to the equivalent period three years earlier. It posted a Third quarter profit increase of 2.34%
to $562.17 million from $549.34 million (excluding extraordinary items) a year earlier, compared to a 16.28% full
year profit increase to $2.32 billion in the 12 months ended last quarter from $2.00 billion three years earlier. The
company's ongoing margin contraction worsened during its last quarter in which EBITDA, operating and net
margins fell by an average -3.43% from the year earlier period, suggesting significant problems with its business
model.
The company's positive earnings surprise on August 16, 2016, 3.70% above the consensus view, failed to excite
investors as the stock fell -5.53% following the announcement, suggesting the report offered poor guidance for
future quarters. In light of this reaction to a positive earnings surprise it's important to consider how this latest
release affected the company's overall grade beyond earnings per share considering its earnings surprise record
is still positive; over the last six quarters it has reported earnings that have been, on average, 4.71% higher than
the consensus estimate. Net Income Qtrly. 07/31/2016 $562M
Net Income Qtrly. Year Ago $549M
Net Income 1 Yr. Chg. 2.34%
Net Income 12 Mo. Tr. Latest $2.3B
Net Income 12 Mo. Tr. 3Y Ago $2B
Net Income 12 Mo. Tr. 3Y Chg. 16.28%

Assuming the Company's Fundamentals Don't Deteriorate in Coming

Value B Quarters, the Stock's Valuation is Acceptable at this Level
Trading at 20.54 times 12-month' earnings per share, TJX Companies,'s
Capital Structure B+
stock is inexpensive relative to our "optimum" P/E ratio of 25.41, the level
that could be justified by the company's EPS growth rate. This
P/E Analysis BMarketGrader-calculated ratio uses the company's quarterly earnings
Price/Book Ratio Bover the last five years, in 12-month rolling periods, to determine the rate
of growth. By its measure, TJX Companies, has grown its earnings per
Price/Cash Flow Ratio B+
share at an annualized rate of 15.69% during that time. This growth has
resulted in strong financial performance, evidenced by the company's P/E Ratio 12 Mo. Tr. 07/31/2016 21.64
Price/Sales Ratio B-
Profitability grade. For this to continue, it must reverse its recent margin
Optimum P/E Ratio 25.41
slide soon. The stock's forward P/E of 20.54, based on its earnings
Market Value B+
estimate for the next four quarters, represents a premium to the S&P 500 Forward P/E Ratio 20.54
S&P 500 Forward P/E Ratio 15.20
index's forward P/E of 15.20 but is lower than its trailing P/E of 21.64. Therefore value could apparently be found
in the company's future earnings growth even though relative to the market the stock might not seem cheap (the Price to (Tangible) Book Ratio 12.89
fundamentals may already be factored into the price). But assuming the company remains fundamentally strong, Price-to-Cash Flow Ratio 15.72
the stock might have further room to run, or at least be a relatively safe place to be if earnings estimates Price/Sales Ratio 1.53
materialize into actual reported results.
TJX Companies,'s market value is 12.89 times the company's tangible book value, which excludes intangible
assets such as goodwill; such a premium suggests investors have high expectations for the company's future
earnings potential. Intangible assets make up a moderate 13.25% of the company's total stockholders' equity. Its
shares seem reasonably priced at 15.72 times the $4.75 in cash flow per share generated by the company over
the last twelve months, if only because its overall fundamentals are pretty healthy. Its price to sales ratio of 1.53
is slightly higher than the Apparel/Footwear Retail's average of 1.05, both based on trailing 12-month sales. Our
final value indicator looks at the relationship between the company's current market capitalization and its
operating profits after deducting taxes. Based on this measure TJX Companies,'s $49.03 billion market cap is an
acceptable valuation, representing a modest multiple of 16.52 times its latest quarterly net income plus
depreciation.

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 September 19, 2016

TJX Companies, Inc.

NYSE: TJX - Apparel/Footwear Retail 70.9
Profitability Record Is Excellent Across the Board Suggesting a Very
Profitability A Well Managed Operation
TJX Companies, is a very profitable company, with an operating margin
Asset Utilization A+ that exceeds its industry average and an excellent return on shareholder
equity, an important part of our analysis. During the last 12 months it
Capital Utilization B+ booked as net profits 7.23% of its total sales, or $2.32 billion, an
Operating Margins B acceptable net profit margin. The average operating margin for the
Apparel/Footwear Retail industry was 8.63% during the same period,
Relative Margins A+ 29.14% below the company's 11.89%. Based on how much it has earned
in the last four quarters, the return on TJX Companies,'s common equity
Return on Equity A+ has been a remarkable 52.21% during this time, even though this is below
the 53.02% return on equity achieved in the year-earlier period. This
Quality of Revenues A+ metric plays an important role in how our system measures a company's
management efficiency.
Despite this moderate downturn the company's leverage is low enough that it could be increased without
overburdening the company in order to ensure that current profitanility is sustained. Its total debt is only 0.36
times total equity while long term debt makes up 26.63% of total capital. TJX Companies,'s core earnings in the
last twelve months grew moderately from the twelve months ended a year earlier. The company's EBITDA for the
most recent period was $4.48 billion, or 4.70% above the $4.28 billion earned from its core operations in the prior
period. EBITDA is used by MarketGrader to measure the company's true earnings power since it includes interest
expenses, income taxes, depreciation and amortization, all non-operating expenses, which are nevertheless
accounted for in other parts of our analysis that look at EPS gains and net income.

Company's Cash Flow Is Very Well Managed as Our Analysis Reflects

Cash Flow A a Very Healthy Operation
TJX Companies,'s cash flow grew considerably in its latest quarter to
Cash Flow Growth A+
$738.35 million, a 53.49% increase from $481.04 million reported in the
year earlier period. This growth seems to be accelerating considering that
EBIDTA Margin B-
in the last twelve months the company's cash flow was 10.71% higher
Debt/Cash Flow Ratio than the twelve months ended a year ago, a nice increase but quite lower
A+
than the current pace. This upward trend should boost its margins and
Interest Cov. Capacity A+
overall profitability in the next few quarters. Even though the company has
$1.62 billion in total debt, its net debt is virtually zero since it has $2.22 Cash Flow Qtrly. 07/31/2016 $738M
Economic Value A+
billion in cash on hand; and since it generated $1.08 billion in earnings
Cash Flow Qtrly Year Ago $481M
before interest, taxes, depreciation and amortization last quarter, it's safe
Retention Rate A+
to say its liquidity is remarkable. Therefore the company's debt is not only Cash Flow 1 Yr. Chg. 53.49%
Cash Flow 12 Mo. Tr. Latest $3.2B
very manageable with its own cash flow but could be increased if it wanted to pursue strategic growth
opportunities. The company also has the ability to enhance shareholder returns through dividends or by Cash Flow 12 Mo. Tr. 3Y Ago $2.5B
repurchasing its own shares, boosting the future value of its earnings. While the total amount of cash and Cash Flow 12 Mo. Tr. 3Y Chg. 24.25%
equivalents on its balance sheet is 0.60% lower than 12 months ago when it was $2.24 billion, during the same Free Cash Flow Last Qtr. $496M
period the company's leverage also fell with total debt now representing 26.63% of total capital compared to
27.52% last year.
An important indicator of management efficiency used by MarketGrader is Economic Value Added, or EVA, Economic Value
which measures each company's true return to shareholders after accounting not only for the cost of running the Total Invested Capital $6.1B
business (operating costs) but also the cost of the capital it employs. By measuring the real cost of capital, both Return on Inv. Capital 62.97%
equity and debt, EVA measures the creation of true economic profit. In this case TJX Companies, had $6.07 Weighted Cost of Equity 5.57%
billion in invested capital in its most recent quarter, a combination of both equity and long term debt. However, the Weighted Cost of Debt 0.70%
company's weighted cost of equity of 5.57% is much larger than the weighted cost of debt, which is 0.70%. When Total Cost of Capital 6.27%
combined, the two result in a total cost of capital of 6.27%, quite low compared to the company's total return on Economic Value Added 56.71%
invested capital of 62.97% based on 12-month trailing operating income. The result is an excellent economic
value added of 56.71%, a very high return to investors after all capital costs are covered. The company increased
its quarterly common dividend on October 31, 2015 by 23.81%, to 26.00 cents a share from 21.00 cents. It has
paid a dividend for at least 36 years and, based on this latest payout, the stock is currently yielding 1.26%. TJX
Companies, spent $592.90 million paying out common dividends in the last 12 months, equivalent to 18.72% of its
total cash flow and 25.51% of what it earned after taxes. This payout ratio, which actually represents a small
increase from the 24.40% of earnings paid out in the year ended a quarter earlier, appears sustainable as long as
the company maintains its generally strong fundamentals.

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 September 19, 2016

TJX Companies, Inc.

NYSE: TJX - Apparel/Footwear Retail 70.9
Profile
The TJX Cos., Inc. operates as an off-price apparel and home fashions retailer in the United States Key Facts:
and worldwide. Its stores offer a rapidly changing assortment of quality, fashionable, brand-name and 770 Cochituate Road
designer merchandise at prices generally 20% to 60% below department and specialty store regular Framingham ,MA 01701
prices. TJX operates its business through the following segments: T.J. Maxx, Marshalls, and Phone:
www.tjx.com
HomeGoods in the United States; Winners, HomeSense, and Marshalls in Canada; and T.K. Maxx
and HomeSense in Europe. The T.J. Maxx segment offers an ever-fresh array of fashionable, brand-
name family apparel, home fashions and other merchandise such as beauty products. The Marshalls Biggest Company in Sub-Industry
segment offers an ever-changing assortment of fashionable, brand-name family apparel, home TJX Companies, Inc. (TJX)
fashions and other merchandise such as toys. The HomeGoods segment offers a broad array of Grade 70.9
home basics, giftware, accent furniture, lamps, rugs, wall decor, decorative accessories, children's Market Cap:$49.03 billion
furniture, seasonal and other merchandise. The Winners segment offers great values, fashions and
brands in family apparel, such as women's, family footwear, fine jewelry, children's apparel, lingerie,
accessories and menswear, home fashions, and other merchandise, including beauty. The Marshalls Smallest Company in Sub-Industry
segment operates an expanded footwear department and a juniors' department called The Cube, Gordmans Stores, Inc. (GMAN)
differentiating it from the Winners chain. The HomeSense segment offers customers a wide and Grade 28.4
rapidly changing selection of off-price home fashions, including giftware, home basics, accent Market Cap:$19.73 million
furniture, lamps, accessories, and wall decor, as well as items for the kitchen, dining room and
bedroom. The T.K. Maxx segment offers great values and styles in brand-name and designer family
apparel, including women's footwear, lingerie, and accessories, home fashions and other
merchandise such as luggage and toys. The HomeSense segment offers a wide, ever-fresh selection
of top-quality branded home fashions at great values to its U.K. customers. The company was
founded by Stanley Harris Feldberg and Sumner L. Feldberg in 1956 and is headquartered in
Framingham, MA.

MarketGrader Dilution Analysis Income Last Qtr 12 Mo.

Statement (07/2016) Trailing
Impact of Change in Shares on EPS - Q3 2016
Dilution Summary Revenue $7.9B $32.1B
*EPS Latest $0.84 Op. Income $913M $3.8B
*EPS Year Ago $0.80
Net Income $562M $2.3B
EPS Change 1 Yr. 5%
*EPS $0.84 0
C. Shares - Latest(M) 667
C. Shares - Yr Ago(M) 685 *Earnings per share are based on fully diluted net income per share
excluding extrodinary items. This number may not match the
C. Shares - 1Yr Chg. (3%) headline number reported by the company.

EPS if Yr. Ago Shares $0.82

EPS Chg. if Yr. Ago 2%
EPS Loss from Dilution $0.02
Balance Sheet Latest

Total Assets $11.7B

*Earnings per share are based on fully diluted net income per share excluding extrodinary items. This number may not match the headline number reported by the company.

Total Debt $1.6B

Stockholders Eq. $4.5B

All numbers in millions except EPS

Ratios
Price/Earnings (12 mo. trailing) 21.64

Price/Tangible Book 12.89

Price/Cash Flow 15.72

Price/Sales 1.53

Debt/Cash Flow 51.02

Return on Equity 52.21%

Gross Margin (12 mo. trailing) 29.08%

Operating Margin (12 mo. trailing) 11.89%

Total Assets $11.7B '11 '12 '13 '14 '15 '16
Net Profit Margin (12 mo. trailing) 7.23%
Intangible Assets $590M Qtr 1 0.19 0.12 0.15 0.18 0.21 0.26
Long Term Debt $1.6B Qtr 2 0.19 0.12 0.15 0.18 0.21 0.26
Total Debt $1.6B Qtr 3 0.19 0.12 0.15 0.18 0.21 0.00
Book Value $4.5B Qtr 4 0.10 0.12 0.15 0.18 0.21
Enterprise Value ($609M)

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 September 19, 2016

TJX Companies, Inc.

NYSE: TJX - Apparel/Footwear Retail 70.9
Top Down Analysis
# Ticker Grade Sentiment Name Price Next EPS
1 LOPE 80.27 P Grand Canyon Education, Inc. $40.30 08/08/2016
Consumer Discretionary 2 DIS 78.44 Walt Disney Company $92.56 11/03/2016
N

Stocks in Sector: 692 3 SBGI 78.35 N Sinclair Broadcast Group, Inc. Class A $28.73 11/02/2016
Buys: 130 (18.79%) 4 FL 77.43 P Foot Locker, Inc. $66.10 08/22/2016
Holds: 149 (21.53%)
Sells: 413 (59.68%) 5 NTRI 76.85 P Nutrisystem, Inc. $27.54 10/31/2016
6 MHK 76.63 P Mohawk Industries, Inc. $205.42 10/27/2016
No. of stocks at:
7 HD 76.20 P Home Depot, Inc. $126.11 11/15/2016
52-Wk. High: 18
52-Wk. Low: 21 8 BBY 76.05 P Best Buy Co., Inc. $38.00 11/15/2016
Above 50 & 200-day MA: 263 9 THO 74.88 P Thor Industries, Inc. $79.11 09/22/2016
Below 50 & 200-day MA: 267
10 SWK 74.69 P Stanley Black & Decker, Inc. $120.12 10/12/2016
28 TJX 70.94 N TJX Companies, Inc. $74.67 11/15/2016

# Ticker Grade Sentiment Name Price Next EPS

1 FL 77.43 P Foot Locker, Inc. $66.10 08/22/2016
Apparel/Footwear Retail
2 ROST 74.21 P Ross Stores, Inc. $61.93 11/17/2016
Stocks in Sub-Industry: 41 3 KORS 73.62 N Michael Kors Holdings Ltd $47.85 11/01/2016
Buys: 10 (24.39%)
4 FRAN 72.30 P Francesca's Holdings Corporation $15.44 09/08/2016
Holds: 8 (19.51%)
Sells: 23 (56.10%) 5 TJX 70.94 N TJX Companies, Inc. $74.67 11/15/2016
6 AEO 70.81 P American Eagle Outfitters, Inc. $18.63 11/30/2016
No. of stocks at:
52-Wk. High: 3 7 CRI 68.50 N Carter's, Inc. $97.32 10/20/2016
52-Wk. Low: 1 8 URBN 67.90 P Urban Outfitters, Inc. $35.89 11/14/2016
Above 50 & 200-day MA: 18
9 LULU 63.75 N Lululemon Athletica Inc $65.98 12/01/2016
Below 50 & 200-day MA: 17
10 PLCE 60.43 P Children's Place, Inc. $82.74 11/17/2016

1. Price Trend. B+ 2. Price Momentum. D

6.9
3. Earnings Guidance. B 4. Short Interest. A-

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