TJX is a great company, but I believe that the share price is overvalued.
Why is it a great company?
Great companies must have great products or services. TJX stores including TJ MAXX and Marshalls have always been the "go-to" stores for my family. We have always been able to purchase quality products at discount prices at these stores. In essence, TJX's brand is providing customers with great value for their money.
In addition to having products that customers love to buy, TJX is also very profitable. Relative to its main competitors (Kohls, Macy's, and Target), TJX has the highest operating margin. The operating margin is a great way to measure the profitability of companies within the same industry. Perhaps what is most appealing to me is the high ROE and ROA for TJX. ROA and ROE are over 17% and 46%, respectively.
Why is the share price overvalued?
I feel that earnings expectations are a unreasonably high at this point in time. It is possible that the share price could drop on the day of the next earnings report (February 23rd). If the price drops drastically on Febrary 23rd, it could be a good time to buy. Until then, do not buy.
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