Comparing TJX Companies (TJX) & GAP (GPS)

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

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, GAP has a beta of 0.84, indicating that its share price is 16% less volatile than the S&P 500.

Profitability

This table compares TJX Companies and GAP’s 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%
GAP 5.35% 28.13% 10.90%

Earnings and Valuation

This table compares TJX Companies and GAP’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
TJX Companies $35.86 billion 1.47 $2.61 billion $4.04 20.65
GAP $15.86 billion 0.76 $848.00 million $2.13 14.48

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

Analyst Ratings

This is a breakdown of recent recommendations and price targets for TJX Companies and GAP, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
TJX Companies 0 4 15 0 2.79
GAP 3 18 5 0 2.08

TJX Companies presently has a consensus target price of $87.26, indicating a potential upside of 4.58%. GAP has a consensus target price of $32.04, indicating a potential upside of 3.90%. Given TJX Companies’ stronger consensus rating and higher probable upside, research analysts plainly believe TJX Companies is more favorable than GAP.

Insider & Institutional Ownership

91.0% of TJX Companies shares are held by institutional investors. Comparatively, 58.3% of GAP shares are held by institutional investors. 0.2% of TJX Companies shares are held by company insiders. Comparatively, 27.3% of GAP shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Dividends

TJX Companies pays an annual dividend of $1.25 per share and has a dividend yield of 1.5%. GAP pays an annual dividend of $0.92 per share and has a dividend yield of 3.0%. TJX Companies pays out 30.9% of its earnings in the form of a dividend. GAP pays out 43.2% 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.

Summary

TJX Companies beats GAP on 14 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 GAP

The Gap, Inc. (Gap Inc.) is an apparel retail company. The Company offers apparel, accessories and personal care products for men, women and children under the Gap, Banana Republic, Old Navy, Athleta and Intermix brands. Its products are available to customers online through Company-owned Websites and through the use of third-parties that provide logistics and fulfillment services. In addition to operating in the specialty, outlet, online and franchise channels, it also uses the Company’s omni-channel capabilities to bridge the digital world and physical stores. Its omni-channel services, including order-in-store, reserve-in-store, find-in-store and ship-from-store are tailored across its portfolio of brands. It also sells products that are designed and manufactured by branded third-parties, especially at its Intermix brands. It has Company-operated stores in the United States, Canada, the United Kingdom, France, Ireland, Japan, Italy, China, Hong Kong, Taiwan, and Mexico.

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