Critical Comparison: Group 1 Automotive (NYSE:GPI) & TJX Companies (NYSE:TJX)

TJX Companies (NYSE:TJX) and Group 1 Automotive (NYSE:GPI) are both consumer discretionary companies, but which is the superior business? We will compare the two companies based on the strength of their institutional ownership, earnings, profitability, analyst recommendations, dividends, valuation and risk.

Valuation & Earnings

This table compares TJX Companies and Group 1 Automotive”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
TJX Companies	$60.37 billion	2.37	$5.49 billion	$5.41	24.05
Group 1 Automotive	$22.57 billion	0.13	$325.20 million	$24.01	10.52

TJX Companies has higher revenue and earnings than Group 1 Automotive. Group 1 Automotive is trading at a lower price-to-earnings ratio than TJX Companies, indicating that it is currently the more affordable of the two stocks.

Dividends

TJX Companies pays an annual dividend of $1.92 per share and has a dividend yield of 1.5%. Group 1 Automotive pays an annual dividend of $2.20 per share and has a dividend yield of 0.9%. TJX Companies pays out 35.5% of its earnings in the form of a dividend. Group 1 Automotive pays out 9.2% 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 increased its dividend for 5 consecutive years and Group 1 Automotive has increased its dividend for 2 consecutive years. TJX Companies is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

TJX Companies has a beta of 0.6, meaning that its share price is 40% less volatile than the S&P 500. Comparatively, Group 1 Automotive has a beta of 0.82, meaning that its share price is 18% less volatile than the S&P 500.

Profitability

This table compares TJX Companies and Group 1 Automotive’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
TJX Companies	9.73%	56.56%	15.92%
Group 1 Automotive	1.31%	15.66%	4.43%

Institutional and Insider Ownership

91.1% of TJX Companies shares are owned by institutional investors. Comparatively, 99.9% of Group 1 Automotive shares are owned by institutional investors. 0.2% of TJX Companies shares are owned by company insiders. Comparatively, 2.4% of Group 1 Automotive shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings for TJX Companies and Group 1 Automotive, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
TJX Companies	0	4	16	2	2.91
Group 1 Automotive	2	3	5	0	2.30

TJX Companies presently has a consensus target price of $171.63, indicating a potential upside of 31.93%. Group 1 Automotive has a consensus target price of $373.38, indicating a potential upside of 47.86%. Given Group 1 Automotive’s higher possible upside, analysts plainly believe Group 1 Automotive is more favorable than TJX Companies.

Summary

TJX Companies beats Group 1 Automotive on 12 of the 18 factors compared between the two stocks.

About TJX Companies

The TJX Companies, Inc., together with its subsidiaries, operates as an off-price apparel and home fashions retailer in the United States, Canada, Europe, and Australia. 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, furniture, rugs, lighting products, giftware, soft home products, decorative accessories, tabletop, and cookware, as well as expanded pet, and gourmet food departments; jewelry and accessories; and other merchandise. It offers its products through stores and e-commerce sites. The TJX Companies, Inc. was incorporated in 1962 and is headquartered in Framingham, Massachusetts.

About Group 1 Automotive

Group 1 Automotive, Inc., through its subsidiaries, operates in the automotive retail industry in the United States and the United Kingdom. The company sells new and used cars, light trucks, and vehicle parts, as well as service and insurance contracts; arranges related vehicle financing; and offers automotive maintenance and repair services. Group 1 Automotive, Inc. was incorporated in 1995 and is headquartered in Houston, Texas.