Financial Contrast: TJX Companies (TJX) and Ross Stores (ROST)

TJX Companies (NYSE: TJX) and Ross Stores (NASDAQ:ROST) are both large-cap retail/wholesale companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, risk, valuation, profitability, earnings, analyst recommendations and institutional ownership.

Risk & Volatility

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TJX Companies has a beta of 0.67, indicating that its share price is 33% less volatile than the S&P 500. Comparatively, Ross Stores has a beta of 1.08, indicating that its share price is 8% more volatile than the S&P 500.



Profitability

This table compares TJX Companies and Ross Stores’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
TJX Companies 7.27% 55.23% 19.45%
Ross Stores 9.64% 44.53% 22.75%

Valuation and Earnings

This table compares TJX Companies and Ross Stores’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
TJX Companies $35.86 billion 1.45 $2.61 billion $4.04 20.37
Ross Stores $14.13 billion 2.07 $1.36 billion $3.34 23.11

TJX Companies has higher revenue and earnings than Ross Stores. TJX Companies is trading at a lower price-to-earnings ratio than Ross Stores, indicating that it is currently the more affordable of the two stocks.

Dividends

TJX Companies pays an annual dividend of $1.25 per share and has a dividend yield of 1.5%. Ross Stores pays an annual dividend of $0.90 per share and has a dividend yield of 1.2%. TJX Companies pays out 30.9% of its earnings in the form of a dividend. Ross Stores pays out 26.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. TJX Companies has raised its dividend for 21 consecutive years and Ross Stores has raised its dividend for 11 consecutive years. TJX Companies is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

90.8% of TJX Companies shares are owned by institutional investors. Comparatively, 90.4% of Ross Stores shares are owned by institutional investors. 0.2% of TJX Companies shares are owned by company insiders. Comparatively, 2.3% of Ross Stores shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and price targets for TJX Companies and Ross Stores, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
TJX Companies 0 4 15 0 2.79
Ross Stores 0 6 17 0 2.74

TJX Companies presently has a consensus price target of $87.58, suggesting a potential upside of 6.41%. Ross Stores has a consensus price target of $82.52, suggesting a potential upside of 6.90%. Given Ross Stores’ higher possible upside, analysts plainly believe Ross Stores is more favorable than TJX Companies.

Summary

Ross Stores beats TJX Companies on 9 of the 17 factors compared between the two stocks.

About TJX Companies

The TJX Companies, Inc. operates as an off-price apparel and home fashions retailer in the United States and internationally. It operates through four segments: Marmaxx, HomeGoods, TJX Canada, and TJX International. The company sells family apparel, including footwear and accessories; home fashions, such as home basics, accent furniture, lamps, rugs, wall décor, decorative accessories, and giftware; seasonal items; jewelry; and other merchandise. It operates stores under the T.J. Maxx, Marshalls, HomeGoods, Winners, HomeSense, T.K. Maxx, and Sierra Trading Post names, as well as operates e-commerce sites tjmaxx.com, tkmaxx.com, and sierratradingpost.com. As of January 28, 2017, the company operated a total of 3,812 stores in 9 countries, including the United States, Canada, the United Kingdom, Ireland, Germany, Poland, Austria, the Netherlands, and Australia, as well as through three e-commerce sites. The TJX Companies, Inc. was founded in 1956 and is based in Framingham, Massachusetts.

About Ross Stores

Ross Stores, Inc., together with its subsidiaries, operates off-price retail apparel and home fashion stores under the Ross Dress for Less and dd's DISCOUNTS brand names in the United States. It primarily offers apparel, accessories, footwear, and home fashions. The company's Ross Dress for Less stores sell its products at savings of 20% to 60% off department and specialty store regular prices primarily to middle income households; and dd's DISCOUNTS stores sell its products at savings of 20% to 70% off moderate department and discount store regular prices to customers from households with moderate income. As of March 12, 2018, it operated 1,432 Ross Dress for Less stores in 38 states, the District of Columbia, and Guam; and 205 dd's DISCOUNTS stores in 16 states. The company was founded in 1982 and is headquartered in Dublin, California.

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