TJX Companies, Inc. (The) (NYSE: TJX) and Dollar Tree (NASDAQ:DLTR) are both large-cap retail/wholesale companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, institutional ownership, dividends, analyst recommendations, profitabiliy, risk and earnings.

Insider and Institutional Ownership

89.0% of TJX Companies, Inc. (The) shares are owned by institutional investors. Comparatively, 92.4% of Dollar Tree shares are owned by institutional investors. 0.2% of TJX Companies, Inc. (The) shares are owned by insiders. Comparatively, 4.1% of Dollar Tree shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings and target prices for TJX Companies, Inc. (The) and Dollar Tree, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
TJX Companies, Inc. (The) 0 3 12 1 2.88
Dollar Tree 1 10 11 0 2.45

TJX Companies, Inc. (The) presently has a consensus target price of $84.63, suggesting a potential upside of 22.79%. Dollar Tree has a consensus target price of $87.70, suggesting a potential upside of 23.71%. Given Dollar Tree’s higher possible upside, analysts clearly believe Dollar Tree is more favorable than TJX Companies, Inc. (The).

Dividends

TJX Companies, Inc. (The) pays an annual dividend of $1.25 per share and has a dividend yield of 1.8%. Dollar Tree does not pay a dividend. TJX Companies, Inc. (The) pays out 35.5% of its earnings in the form of a dividend. Dollar Tree has raised its dividend for 20 consecutive years.

Risk & Volatility

TJX Companies, Inc. (The) has a beta of 0.78, indicating that its share price is 22% less volatile than the S&P 500. Comparatively, Dollar Tree has a beta of 0.68, indicating that its share price is 32% less volatile than the S&P 500.

Earnings and Valuation

This table compares TJX Companies, Inc. (The) and Dollar Tree’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
TJX Companies, Inc. (The) $33.43 billion 1.33 $4.53 billion $3.52 19.58
Dollar Tree $20.92 billion 0.80 $2.30 billion $3.65 19.42

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

Profitability

This table compares TJX Companies, Inc. (The) and Dollar Tree’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
TJX Companies, Inc. (The) 6.96% 53.34% 18.97%
Dollar Tree 4.13% 17.68% 5.76%

Summary

TJX Companies, Inc. (The) beats Dollar Tree on 12 of the 18 factors compared between the two stocks.

About TJX Companies, Inc. (The)

The TJX Companies, Inc. (TJX) is an off-price apparel and home fashions retailer in the United States and across the world. The Company operates through four segments: Marmaxx, HomeGoods, TJX Canada and TJX International. T.J. Maxx and Marshalls chains in the United States were collectively the off-price retailer in the United States with a total of 2,221 stores, as of January 28, 2017. The HomeGoods chain was an off-price retailer of home fashions in the United States with 579 stores. The TJX Canada segment operates the Winners, HomeSense and Marshalls chains in Canada. Winners is the off-price apparel and home fashions retailer in Canada. HomeSense offers home fashions off-price concept in Canada. The TJX International segment operates the T.K. Maxx and HomeSense chains in Europe. With 503 stores, T.K. Maxx operated in the United Kingdom, Ireland, Germany, Poland, Austria and the Netherlands.

About Dollar Tree

Dollar Tree, Inc. is an operator of discount variety stores. As of January 28, 2017, the Company operated 14,334 stores in 48 states and the District of Columbia, and five Canadian provinces. Its segments include Dollar Tree and Family Dollar. The Dollar Tree segment is the operator of discount variety stores offering merchandise at a fixed price. The Family Dollar segment operates a chain of general merchandise retail discount stores providing consumers with a selection of merchandise in neighborhood stores. Its stores operate under the names of Dollar Tree, Family Dollar and Dollar Tree Canada. As of January 28, 2017, the Dollar Tree segment included 6,360 stores operating under the Dollar Tree and Dollar Tree Canada brands, 11 distribution centers in the United States and two in Canada and a Store Support Center in Chesapeake, Virginia, and 11 distribution centers and a Store Support Center in Matthews, North Carolina under the Family Dollar brand.

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