Is TJX Companies Inc A Buy Before Earnings?

TJX Unusual Option Activity Report

It’s hard to imagine that TJX Companies (TJX), which had to close all of its stores and furlough its employees, is near a 52-week high, but it is. After all, this is a single channel brick and mortar company owns stores like T.J. Maxx, Marshall’s, and Home Goods. TJX is an off-price retailer that entices customers with a “treasure hunt” experience. Despite the store closures, TJX appears well positioned in a post-COVID world.

TJX Option Activity

Their position in the retail space and future prospects may be what option traders were looking at on Wednesday. Despite the large call trade that was made, the stock finished virtually unchanged for the day. Here’s the details of the trade:

  • 3,000 18 DEC 20 $55 call BOT @ $3.60 in one print

The strike selection was at-the-money but is still reflective of bullish interest. The breakeven price on the trade is $58.60 with 57 days left to expiration. The notional value of the trade is $1.08 million, which isn’t exactly pocket change.

TJX Analyst Expectations

The company has been materially impacted by COVID based the earnings projections for TJX on Yahoo! Finance,. The current year 2021 EPS estimates are $0.14 on a 21% decline in revenues. That’s a far cry from 2020s $2.67. Looking at 2021, EPS is expected to come in at $2.53 on a 29% increase in revenue. That’s not exactly getting back to where it started, but it’s close.

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The EPS trend for the current quarter and for the 2021 fiscal year hasn’t looked good either. In the past 90 days, the current quarter EPS estimate has been revised lower from $0.56 to $0.38. That’s all since its last earnings report that missed estimates by 80%. Earnings have been negatively revised for the 2021 fiscal year from $0.42 to its current projection of $0.14.

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The 5-year projected EPS for TJX is only 2.1% compared to 10.68% in the previous five years.

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