TJX (TJX) Advances While Market Declines: Some Information for Investors

Wall Street watches a company's quarterly report closely to understand as much as possible about its recent performance and what to expect going forward. Of course, one figure often stands out among the rest: earnings.

We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these earnings surprises.

Now that we know how important earnings and earnings surprises are, it's time to show investors how to take advantage of these events to boost their returns by utilizing the Zacks Earnings ESP filter.

The Zacks Earnings ESP, Explained

The Zacks Expected Surprise Prediction, or ESP, works by locking in on the most up-to-date analyst earnings revisions because they can be more accurate than estimates from weeks or even months before the actual release date. The thinking is pretty straightforward: analysts who provide earnings estimates closer to the report are likely to have more information.

With this in mind, the Expected Surprise Prediction compares the Most Accurate Estimate (being the most recent) against the overall Zacks Consensus Estimate. The percentage difference provides the ESP figure. The system also utilizes our core Zacks Rank to provide a stronger system for identifying stocks that might beat their next quarterly earnings estimate and possibly see the stock price climb.

Bringing together a positive earnings ESP alongside a Zacks Rank #3 (Hold) or better has helped stocks report a positive earnings surprise 70% of the time. Furthermore, by using these parameters, investors have seen 28.3% annual returns on average, according to our 10 year backtest.

Stocks with a #3 (Hold) ranking, which is most stocks covered at 60%, are expected to perform in-line with the broader market. But stocks that fall into the #2 (Buy) and #1 (Strong Buy) ranking, or the top 15% and top 5% of stocks, respectively, should outperform the market. Strong Buy stocks should outperform more than any other rank.

Should You Consider TJX?

The last thing we will do today, now that we have a grasp on the ESP and how powerful of a tool it can be, is to quickly look at a qualifying stock. TJX (TJX) holds a #3 (Hold) at the moment and its Most Accurate Estimate comes in at $1.12 a share eight days away from its upcoming earnings release on November 20, 2024.

TJX has an Earnings ESP figure of +2.52%, which, as explained above, is calculated by taking the percentage difference between the $1.12 Most Accurate Estimate and the Zacks Consensus Estimate of $1.09. TJX is one of a large database of stocks with positive ESPs. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.

TJX is one of just a large database of Retail and Wholesale stocks with positive ESPs. Another solid-looking stock is Casey's General Stores (CASY).

Casey's General Stores is a Zacks Rank #2 (Buy) stock, and is getting ready to report earnings on December 9, 2024. CASY's Most Accurate Estimate sits at $4.50 a share 27 days from its next earnings release.

Casey's General Stores' Earnings ESP figure currently stands at +5.22% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $4.28.

TJX and CASY's positive ESP figures tell us that both stocks have a good chance at beating analyst expectations in their next earnings report.

Find Stocks to Buy or Sell Before They're Reported

Use the Zacks Earnings ESP Filter to turn up stocks with the highest probability of positively, or negatively, surprising to buy or sell before they're reported for profitable earnings season trading. Check it out here >>

Zacks Investment Research

For Immediate Release

Chicago, IL –November 11, 2024 – Zacks Equity Research shares Target’s TGT, as the Bull of the Day and Hershey’s HSY, as the Bear of the Day. In addition, Zacks Equity Research provides analysis on Mission Produce, Inc. AVO, BGC Group, Inc. BGC and Nu Holdings Ltd. NU.

Here is a synopsis of all five stocks:

Bull of the Day:

Making significant progress in addressing inventory concerns, Target’s stock appears to be at a positive inflection point ahead of its Q3 results on Wednesday, November 20.

Sporting a Zacks Rank #1 (Strong Buy) and landing the Bull of the Day, let’s take a look at why investing in Target looks favorable again.

Targets Q3 Expectations

Based on Zacks estimates, Target’s Q3 sales are projected to increase 2% to $25.97 billion. On the bottom line, Q3 EPS is expected to rise 8% to $2.28 versus $2.10 per share in the comparative quarter.

Target most recently surpassed Q2 earnings expectations by nearly 19% in August with EPS at $2.57 compared to estimates of $2.16 a share. Notably, Target has surpassed the Zacks EPS Consensus in three of its last four quarterly reports posting an average earnings surprise of 20.26%.

Addressing Shrink Concerns

Target has been at the forefront of addressing shrink concerns as theft and damaged goods have affected many retailers in recent years. To that point, Walmart WMT, TJX Companies TJX , and Dollar General DG are some of the other notable names that have dealt with the dismal effects of shrink.

As reported by Yahoo Finance, Target has been a leader in increasing security measures by installing locking cases for items prone to theft while investing in additional security members and third-party training services.

Target also plans to partner with the US Department of Homeland Security to develop cyber defense technology in a bid to curb organized retail crime. These efforts have largely attributed to Target's increased probability considering shrink reduced its profit by an astonishing $1.2 billion in the last two years.

Tracking Targets Rebound & Valuation

Boosting investor sentiment by addressing its shrink issues, Target’s stock is up a modest +6% year to date but has now soared +37% over the last year. Edging the benchmark S&P 500’s one-year performance, Target has trailed Walmart’s +53% but has topped TJX’s +28% and Dollar General’s plummet of -34%.

Most intriguing, is that TGT trades at 15.4X forward earnings which is a pleasant discount to the S&P 500’s 25.1X and Walmart’s 34.2X.

Magnifying this perceived discount is that Target’s annual earnings are forecasted to increase 7% in its current fiscal 2025 and are projected to climb another 11% in FY26 to $10.56 per share.

It’s also noteworthy that TGT trades at just 0.6X sales with its top line expected to be virtually flat in FY25 but slated to increase 3% in FY26 to $110.27 billion.

Bottom Line

Correlating with Target’s strong buy rating is that earnings estimate revisions have remained higher for FY25 and FY26. The Average Zacks Price target of $177.28 a share suggests 20% upside in TGT with Target checking an overall “A” VGM Zacks Style Scores grade for the combination of Value, Growth, and Momentum.

Bear of the Day:

Reporting lackluster third quarter results on Thursday, there could be more downside risk ahead for Hershey’s stock.

To that point, the iconic chocolate manufacturer had already seen a decline in its earnings estimate revisions with HSY landing a Zacks Rank #5 (Strong Sell) and the Bear of the Day.

Hershey’s Dismal Q3 Results

Attributed to what it called a challenging consumer environment, Hershey’s Q3 sales of $2.98 billion dipped 1% from the comparative period and missed estimates of $3.07 billion by 3%.

Lower sales volumes curtailed Hershey’s profit with Q3 EPS of $2.34 dipping 10% from a year ago and missing expectations of $2.50 per share by 6%.

Furthermore, Hershey previously missed Q2 earnings and sales estimates in August with surprises of -12% and -10% respectively.

High Cocoa Prices

Causing more concern was Hershey’s acknowledgment that historically high cocoa prices are weighing on its operating efficiency as well. As the prime ingredient in producing chocolate, cocoa prices are still toward the high end of its 50-year range at over $7,000 per ton.

Declining EPS Estimates

Leading to the strong sell rating for Hershey’s stock, EPS estimates for fiscal 2024 and FY25 have continued to decline over the last 90 days. Unfortunately, the trend of declining earnings estimate revisions will likely continue as Hershey’s full-year FY24 EPS guidance of $9.00-$9.10 came in below the current Zacks Consensus of $9.39 per share.

Bottom Line

For now, it could be best to avoid Hershey’s stock as weaker snacking demand and high cocoa prices are starting to weigh on North America’s largest chocolate producer.

Hershey’s stock is now down -7% year to date and has dropped -25% in the last three years. Correlating with such, it’s noteworthy that Hershey’s Zacks Food-Confectionary Industry is currently in the bottom 5% of over 250 Zacks industries.

Additional content:

3 Strong Breakout Stocks to Add to Your Portfolio

Searching for stocks whose prices are fluctuating within a specific band, or in other words, picking breakout stocks, is an active investing approach. When selecting breakout stocks, it’s advised to sell if the price dips below the lower band and consider holding for potential gains if the price surpasses the upper band.

To that end, Mission Produce, Inc., BGC Group, Inc. and Nu Holdings Ltd. have been selected as the breakout stocks for today.

Zeroing in on Breakout Stocks

To select the right breakout stock, one has first to calculate its support and resistance level. A support level is the lower bound for stock movements, while a resistance level refers to the maximum price it trades within a considerable period.

In other words, the demand for a stock is at its lowest at its support level, which means that most traders are willing to sell it. Most traders are willing to go long on the stock at the resistance level, meaning they would like to add them to their portfolio. The key to identifying breakout stocks is to zero in on those on the verge of a breakout or those that have just broken above the resistance level.

Has a Genuine Breakout Occurred?

The primary risk associated with such a strategy is that the decision to buy an apparent breakout candidate has been incorrectly timed. When a stock moves above the resistance level, it should be a highly prized commodity for traders. However, whether such a breakout is genuine is another matter altogether.

For a bona fide breakout, the stock’s earlier resistance barrier should become its new support level. This only happens if the trading channel that has been established is tested by observing long-term price trends. The strength of the support and resistance levels can be ascertained only through such a study. Despite the risk of misidentification, correctly identifying such stocks can yield considerable returns, even at a price that may not seem attractive at first glance.

Screening Criteria Using Research Wizard:

• Percentage price change over four weeks between 10% and 20% (Stocks showing considerable price increases but whose gains are not excessive.)

• Current Price /52-Week High greater than or equal to 0.9 (Stocks trading 90% close to their 52-week highs.)

• Zacks Rank equal to #1 (Only Strong Buy rated stocks can get through.)

Whether the market is good or bad, stocks with a Zacks Rank #1 (Strong Buy) have a proven history of outperformance. You can see the complete list of today’s Zacks #1 Rank stocks here.

• Beta for 60 months less than or equal to 2

(Stocks that move more than the broader market but within a reasonable limit.)

• Current price less than or equal to $20 (Stocks reasonably priced.)

These criteria narrow the universe of more than 6,853 stocks to only nine. Here are the top three stocks:

Mission Produce

Mission Produce sources, produces, packs, distributes, and markets avocados in the United States and worldwide. AVO has an expected earnings growth rate of 136.8% for the current year.

BGC Group

BGC Group is a brokerage and financial technology company. BGC has an expected earnings growth rate of 20.7% for the current year.

Nu Holdings

Nu Holdings provides a digital banking and technology platform. NU has an expected earnings growth rate of 70.8% for the current year.

You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.

The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.

Click here to sign up for a free trial to the Research Wizard today.

Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance.

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Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer.

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Zacks Investment Research

Delighting its shareholders, Regency Centers Corporation REG has announced a 5.2% increase in its quarterly common stock dividend to 70.5 cents. This marks its 11th successive year of increases. The increased amount will be paid out on Jan. 3, 2025 to shareholders on record as of Dec. 16, 2024.

Reflecting positive sentiments, shares of Regency were up more than 1% during yesterday’s trading session.

The latest dividend rate marks an annualized amount of $2.82 per share compared with the prior rate of $2.68. Based on the company’s share price of $73.87 on Nov. 7, the latest hike results in a dividend yield of 3.82%.

Solid dividend payouts are the biggest attraction for REIT investors, and Regency is committed to boosting shareholder wealth. This retail REIT has steadily grown dividends per share since 2014 and maintained dividend payments through the COVID-19 pandemic. From 2014 through 2023, the company’s dividend witnessed a CAGR of 3.8%. In the last five years, REG has increased its dividend five times and has a five-year annualized dividend growth rate of 3.29%. Check Regency Centers’ dividend history here.

REG’s Business Model Supports Sustainable Dividend Payment

The latest hike reflects Regency’s ability to generate decent cash flow through its operating platform and high-quality portfolio. It has a high-quality open-air shopping center portfolio, with more than 80% grocery-anchored neighborhood and community centers. This focus on building a premium portfolio of grocery-anchored shopping centers is a strategic fit because such centers are usually necessity-driven and attract dependable traffic.

In uncertain times, the grocery component has benefited retail REITs, and Regency has numerous industry-leading grocers such as Publix, Kroger KR, Albertsons Companies, TJX Companies, Inc. TJX and Amazon/Whole Foods as tenants. Six of Regency’s top 10 tenants are high-performing grocers. The focus on necessity, service, convenience and value retailers serving the essential needs of the communities provides Regency with a strategic advantage.

Regency’s premium shopping centers are situated in affluent suburban areas and near the urban trade areas where consumers have high spending power. This enables the company to attract top grocers and retailers.

Regency also came up with solid results recently, reporting third-quarter 2024 NAREIT funds from operations (FFO) per share of $1.07, outpacing the Zacks Consensus Estimate of $1.04. The figure increased 4.9% from the prior-year quarter. Results reflected healthy leasing activity and a year-over-year improvement in the same property's net operating income (NOI) and base rents. The company raised its 2024 outlook.

Regency maintains a healthy balance sheet position, and as of Sept. 30, 2024, this retail REIT had nearly $1.5 billion of capacity under its revolving credit facility. As of the same date, its pro-rata net debt and preferred stock to operating EBITDAre was 5.2X. The company’s investment-grade credit ratings of A3 and BBB+ from Moody’s and S&P Global, respectively, render it access to the debt market at favorable costs. With low leverage, limited near-term maturities and a large pool of unencumbered assets, the company remains well-poised to meet its obligations and bank on growth scopes.

REG: In a Nutshell

With a solid operating model and a healthy financial position, we expect the latest dividend rate to be sustainable.

Over the past six months, shares of this Zacks Rank #2 (Buy) company have rallied 24.5%, outperforming the industry’s growth of 12.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.

Zacks Investment Research

Making significant progress in addressing inventory concerns, Target’s TGT stock appears to be at a positive inflection point ahead of its Q3 results on Wednesday, November 20.

Sporting a Zacks Rank #1 (Strong Buy) and landing the Bull of the Day, let’s take a look at why investing in Target looks favorable again.

Targets Q3 Expectations

Based on Zacks estimates, Target’s Q3 sales are projected to increase 2% to $25.97 billion. On the bottom line, Q3 EPS is expected to rise 8% to $2.28 versus $2.10 per share in the comparative quarter.

Target most recently surpassed Q2 earnings expectations by nearly 19% in August with EPS at $2.57 compared to estimates of $2.16 a share. Notably, Target has surpassed the Zacks EPS Consensus in three of its last four quarterly reports posting an average earnings surprise of 20.26%.

Addressing Shrink Concerns

Target has been at the forefront of addressing shrink concerns as theft and damaged goods have affected many retailers in recent years. To that point, Walmart WMT, TJX Companies TJX, and Dollar General DG are some of the other notable names that have dealt with the dismal effects of shrink.

As reported by Yahoo Finance, Target has been a leader in increasing security measures by installing locking cases for items prone to theft while investing in additional security members and third-party training services.

Target also plans to partner with the US Department of Homeland Security to develop cyber defense technology in a bid to curb organized retail crime. These efforts have largely attributed to Target's increased probability considering shrink reduced its profit by an astonishing $1.2 billion in the last two years.

Tracking Targets Rebound & Valuation

Boosting investor sentiment by addressing its shrink issues, Target’s stock is up a modest +6% year to date but has now soared +37% over the last year. Edging the benchmark S&P 500’s one-year performance, Target has trailed Walmart’s +53% but has topped TJX’s +28% and Dollar General’s plummet of -34% .

Most intriguing, is that TGT trades at 15.4X forward earnings which is a pleasant discount to the S&P 500’s 25.1X and Walmart’s 34.2X.

Magnifying this perceived discount is that Target’s annual earnings are forecasted to increase 7% in its current fiscal 2025 and are projected to climb another 11% in FY26 to $10.56 per share.

It’s also noteworthy that TGT trades at just 0.6X sales with its top line expected to be virtually flat in FY25 but slated to increase 3% in FY26 to $110.27 billion.

Bottom Line

Correlating with Target’s strong buy rating is that earnings estimate revisions have remained higher for FY25 and FY26. The Average Zacks Price target of $177.28 a share suggests 20% upside in TGT with Target checking an overall “A” VGM Zacks Style Scores grade for the combination of Value, Growth, and Momentum.

Zacks Investment Research