Analysts Are Saying TJX Companies Is a Buy Despite Lackluster Quarterly Earnings. Are They Right?

TJX Companies (NYSE: TJX), the retail conglomerate that owns TJ Maxx and Marshall's, didn't wow the market with its most recent quarterly performance. In mid-May it published first-quarter of its fiscal 2026 results that disappointed investors, who traded out of the company's stock mainly due to weaker-than-expected guidance.

Somewhat counter-intuitively, however, a clutch of analysts tracking TJX stock reiterated their bullish takes on the company, with several going so far as to raise their price targets. Let's unpack the reasons for this and determine whether such optimism is justified.

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Grumbling about guidance

One indisputably positive element of TJX's first quarter was that the company managed to grow its most crucial sales figures. Its top line was slightly over $13.1 billion, representing improvement of 5% on a year-over-year basis -- rather a high rate for a discount retailer, and one that's been in the game as long as TJX. That top-line number also exceeded the consensus analyst estimates, if only slightly.

Same-store sales, always a crucial metric in the retail game, also didn't look bad -- they increased by 3% during the period. Meanwhile, the company's overall store count grew by 26 (to an end-quarter tally of 5,121), and of course that rise was at least partially responsible for the higher net sales.

Net income, based on GAAP (generally accepted accounting principles), went in the opposite direction, dipping by 3% to a shade over $1 billion. Like overall sales, this very modestly exceeded the average pundit projection.

So there wasn't anything overly concerning in TJX's key metrics for the quarter. The rub, however, was in the company's guidance. With the proviso that its assumptions were based on the state of the U.S.-China tariff dispute as of May 21, management provided an outlook for both its current (second) quarter, and the entirety of fiscal 2026.

TJX is modeling comparable sales growth of 2% to 3% year over year for the quarter, with earnings per share (EPS) coming in at $0.97 to $1. The latter range is 1% to 4% over the actual second quarter of fiscal 2025 result, yet those analysts following the company's stock have an average $1.04 estimate for the metric.

For the entirety of this fiscal year, TJX is anticipating that "comps" will rise at a 2% to 3% clip, which is somewhat dispiriting given that fiscal 2025's growth was 4%. Anyway, this should filter down into per-share earnings of $4.34 to $4.43, meaning year-over-year improvement of at least 2%. Again, though, the consensus analyst estimate is some distance north of that range, at $4.49.

It's safe to say that that bottom-line guidance misses were the chief drivers of the stock's post-earnings sell-off. The continued uncertainty over the state of our up-and-down tariff spat with China wasn't helping sentiment. either.

Image source: Getty Images.

Pundit positivity

None of this dissuaded most of the analysts making those projections. A typical reaction was the one from Bank of America Securities' Lorraine Hutchinson, who confidently reiterated her buy recommendation on the stock and $145 per share price target (which anticipates double-digit upside for the shares of 15%).

According to reports, Hutchinson feels that TJX is still effectively targeting "trade down" consumers, i.e. folks looking to save money by purchasing more modestly priced items than previously. At the same time, management is doing a fine job leveraging quality branded products to capture market share in a range of demographics.

As for tariffs, the analyst essentially believes that they are already priced into the stock. She wrote that much of the pressure of the tariffs is contained, at least in this current quarter. With those factors, the BofA Securities pundit slightly increased her EPS forecasts for both this and next fiscal year.

Growth and income, a fine combination

Let's get down to it -- does all this make TJX shares a buy?

I'd say yes. I agree with bullish takes like Hutchinson's, sharing the observations that management is working well with what it has to offer customers. I, too, am impressed with its efforts to fine-tune product mix. By my personal observation. TJ Maxx and Marshall's outlets continue to be durably popular and well trafficked. I think there are solid reasons for this.

Another reason to like TJX is that it is one of the steadiest and most reliable dividend payers in the retail sector. In fact, its latest dividend raise is about to kick in, for the 28th time in the last 29 years.

That combination of good prospects for fundamental growth and a regular payout constantly boosting shareholder income is appealing to me. I'm siding with the bulls on TJX stock.

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Bank of America is an advertising partner of Motley Fool Money. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America and TJX Companies. The Motley Fool has a disclosure policy.