Intrinsic value of TJX - TJX

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$78.56

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$78.56

 
Intrinsic value

$87.42

 
Up/down potential

+11%

 
Rating

hold

 
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*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of TJX stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2017), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 50.3

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2017(a)
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  7.24
  5.60
  5.54
  5.49
  5.44
  5.39
  5.35
  5.32
  5.29
  5.26
  5.23
  5.21
  5.19
  5.17
  5.15
  5.14
  5.12
  5.11
  5.10
  5.09
  5.08
  5.07
  5.07
  5.06
  5.05
  5.05
  5.04
  5.04
  5.03
  5.03
  5.03
Revenue, $m
  33,184
  35,042
  36,984
  39,013
  41,134
  43,352
  45,674
  48,103
  50,646
  53,309
  56,099
  59,021
  62,083
  65,293
  68,657
  72,184
  75,882
  79,761
  83,828
  88,095
  92,572
  97,268
  102,195
  107,365
  112,790
  118,484
  124,459
  130,730
  137,312
  144,221
  151,473
Variable operating expenses, $m
 
  30,836
  32,543
  34,328
  36,193
  38,144
  40,185
  42,322
  44,558
  46,900
  49,353
  51,904
  54,597
  57,419
  60,377
  63,479
  66,731
  70,142
  73,720
  77,472
  81,408
  85,538
  89,871
  94,418
  99,189
  104,196
  109,451
  114,966
  120,754
  126,829
  133,207
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  29,434
  30,836
  32,543
  34,328
  36,193
  38,144
  40,185
  42,322
  44,558
  46,900
  49,353
  51,904
  54,597
  57,419
  60,377
  63,479
  66,731
  70,142
  73,720
  77,472
  81,408
  85,538
  89,871
  94,418
  99,189
  104,196
  109,451
  114,966
  120,754
  126,829
  133,207
Operating income, $m
  3,750
  4,206
  4,440
  4,685
  4,941
  5,208
  5,488
  5,781
  6,088
  6,409
  6,745
  7,117
  7,487
  7,874
  8,279
  8,705
  9,151
  9,618
  10,109
  10,623
  11,163
  11,730
  12,324
  12,947
  13,601
  14,288
  15,009
  15,765
  16,559
  17,392
  18,266
EBITDA, $m
  4,409
  4,891
  5,162
  5,445
  5,741
  6,051
  6,375
  6,714
  7,069
  7,441
  7,830
  8,238
  8,665
  9,113
  9,583
  10,075
  10,591
  11,133
  11,700
  12,296
  12,921
  13,576
  14,264
  14,986
  15,743
  16,538
  17,372
  18,247
  19,166
  20,130
  21,142
Interest expense (income), $m
  73
  87
  104
  121
  140
  159
  179
  200
  222
  245
  270
  295
  321
  349
  378
  409
  441
  475
  510
  547
  586
  626
  669
  714
  761
  810
  862
  916
  973
  1,033
  1,096
Earnings before tax, $m
  3,723
  4,120
  4,337
  4,564
  4,801
  5,049
  5,309
  5,581
  5,866
  6,164
  6,476
  6,823
  7,165
  7,524
  7,901
  8,296
  8,710
  9,144
  9,599
  10,077
  10,578
  11,103
  11,655
  12,233
  12,841
  13,478
  14,147
  14,849
  15,586
  16,359
  17,171
Tax expense, $m
  1,425
  1,112
  1,171
  1,232
  1,296
  1,363
  1,433
  1,507
  1,584
  1,664
  1,748
  1,842
  1,935
  2,032
  2,133
  2,240
  2,352
  2,469
  2,592
  2,721
  2,856
  2,998
  3,147
  3,303
  3,467
  3,639
  3,820
  4,009
  4,208
  4,417
  4,636
Net income, $m
  2,298
  3,007
  3,166
  3,332
  3,505
  3,686
  3,876
  4,074
  4,282
  4,499
  4,727
  4,980
  5,231
  5,493
  5,768
  6,056
  6,358
  6,675
  7,007
  7,356
  7,722
  8,105
  8,508
  8,930
  9,374
  9,839
  10,327
  10,840
  11,377
  11,942
  12,535

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  3,473
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  12,884
  9,938
  10,489
  11,064
  11,666
  12,295
  12,953
  13,642
  14,364
  15,119
  15,910
  16,739
  17,607
  18,517
  19,472
  20,472
  21,521
  22,621
  23,774
  24,985
  26,254
  27,586
  28,983
  30,450
  31,988
  33,603
  35,298
  37,076
  38,943
  40,902
  42,959
Adjusted assets (=assets-cash), $m
  9,411
  9,938
  10,489
  11,064
  11,666
  12,295
  12,953
  13,642
  14,364
  15,119
  15,910
  16,739
  17,607
  18,517
  19,472
  20,472
  21,521
  22,621
  23,774
  24,985
  26,254
  27,586
  28,983
  30,450
  31,988
  33,603
  35,298
  37,076
  38,943
  40,902
  42,959
Revenue / Adjusted assets
  3.526
  3.526
  3.526
  3.526
  3.526
  3.526
  3.526
  3.526
  3.526
  3.526
  3.526
  3.526
  3.526
  3.526
  3.526
  3.526
  3.526
  3.526
  3.526
  3.526
  3.526
  3.526
  3.526
  3.526
  3.526
  3.526
  3.526
  3.526
  3.526
  3.526
  3.526
Average production assets, $m
  4,335
  4,591
  4,845
  5,111
  5,389
  5,679
  5,983
  6,301
  6,635
  6,984
  7,349
  7,732
  8,133
  8,553
  8,994
  9,456
  9,941
  10,449
  10,982
  11,540
  12,127
  12,742
  13,388
  14,065
  14,776
  15,521
  16,304
  17,126
  17,988
  18,893
  19,843
Working capital, $m
  2,993
  -491
  -518
  -546
  -576
  -607
  -639
  -673
  -709
  -746
  -785
  -826
  -869
  -914
  -961
  -1,011
  -1,062
  -1,117
  -1,174
  -1,233
  -1,296
  -1,362
  -1,431
  -1,503
  -1,579
  -1,659
  -1,742
  -1,830
  -1,922
  -2,019
  -2,121
Total debt, $m
  2,404
  2,876
  3,366
  3,878
  4,414
  4,974
  5,560
  6,173
  6,815
  7,487
  8,191
  8,929
  9,701
  10,512
  11,361
  12,251
  13,184
  14,163
  15,190
  16,267
  17,397
  18,582
  19,826
  21,131
  22,501
  23,938
  25,446
  27,029
  28,690
  30,434
  32,264
Total liabilities, $m
  8,373
  8,845
  9,335
  9,847
  10,383
  10,943
  11,529
  12,142
  12,784
  13,456
  14,160
  14,898
  15,670
  16,481
  17,330
  18,220
  19,153
  20,132
  21,159
  22,236
  23,366
  24,551
  25,795
  27,100
  28,470
  29,907
  31,415
  32,998
  34,659
  36,403
  38,233
Total equity, $m
  4,511
  1,093
  1,154
  1,217
  1,283
  1,352
  1,425
  1,501
  1,580
  1,663
  1,750
  1,841
  1,937
  2,037
  2,142
  2,252
  2,367
  2,488
  2,615
  2,748
  2,888
  3,034
  3,188
  3,349
  3,519
  3,696
  3,883
  4,078
  4,284
  4,499
  4,725
Total liabilities and equity, $m
  12,884
  9,938
  10,489
  11,064
  11,666
  12,295
  12,954
  13,643
  14,364
  15,119
  15,910
  16,739
  17,607
  18,518
  19,472
  20,472
  21,520
  22,620
  23,774
  24,984
  26,254
  27,585
  28,983
  30,449
  31,989
  33,603
  35,298
  37,076
  38,943
  40,902
  42,958
Debt-to-equity ratio
  0.533
  2.630
  2.920
  3.190
  3.440
  3.680
  3.900
  4.110
  4.310
  4.500
  4.680
  4.850
  5.010
  5.160
  5.300
  5.440
  5.570
  5.690
  5.810
  5.920
  6.020
  6.120
  6.220
  6.310
  6.390
  6.480
  6.550
  6.630
  6.700
  6.760
  6.830
Adjusted equity ratio
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110
  0.110

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,298
  3,007
  3,166
  3,332
  3,505
  3,686
  3,876
  4,074
  4,282
  4,499
  4,727
  4,980
  5,231
  5,493
  5,768
  6,056
  6,358
  6,675
  7,007
  7,356
  7,722
  8,105
  8,508
  8,930
  9,374
  9,839
  10,327
  10,840
  11,377
  11,942
  12,535
Depreciation, amort., depletion, $m
  659
  685
  722
  760
  801
  843
  887
  933
  981
  1,032
  1,085
  1,121
  1,179
  1,240
  1,303
  1,370
  1,441
  1,514
  1,592
  1,673
  1,758
  1,847
  1,940
  2,038
  2,141
  2,249
  2,363
  2,482
  2,607
  2,738
  2,876
Funds from operations, $m
  4,133
  3,692
  3,888
  4,092
  4,305
  4,529
  4,762
  5,007
  5,263
  5,531
  5,812
  6,101
  6,409
  6,732
  7,071
  7,426
  7,799
  8,189
  8,599
  9,028
  9,479
  9,952
  10,448
  10,969
  11,515
  12,088
  12,690
  13,322
  13,984
  14,680
  15,410
Change in working capital, $m
  531
  -26
  -27
  -28
  -30
  -31
  -32
  -34
  -36
  -37
  -39
  -41
  -43
  -45
  -47
  -49
  -52
  -54
  -57
  -60
  -63
  -66
  -69
  -72
  -76
  -80
  -84
  -88
  -92
  -97
  -102
Cash from operations, $m
  3,602
  3,915
  3,915
  4,120
  4,335
  4,560
  4,795
  5,041
  5,299
  5,568
  5,851
  6,142
  6,452
  6,777
  7,118
  7,476
  7,850
  8,244
  8,656
  9,088
  9,542
  10,018
  10,517
  11,041
  11,591
  12,168
  12,774
  13,409
  14,077
  14,777
  15,512
Maintenance CAPEX, $m
  0
  -628
  -665
  -702
  -741
  -781
  -823
  -867
  -913
  -962
  -1,012
  -1,065
  -1,121
  -1,179
  -1,240
  -1,303
  -1,370
  -1,441
  -1,514
  -1,592
  -1,673
  -1,758
  -1,847
  -1,940
  -2,038
  -2,141
  -2,249
  -2,363
  -2,482
  -2,607
  -2,738
New CAPEX, $m
  -1,027
  -256
  -254
  -266
  -278
  -291
  -304
  -318
  -333
  -349
  -365
  -383
  -401
  -420
  -441
  -462
  -484
  -508
  -533
  -559
  -586
  -615
  -645
  -677
  -711
  -746
  -783
  -822
  -862
  -905
  -950
Cash from investing activities, $m
  -1,215
  -884
  -919
  -968
  -1,019
  -1,072
  -1,127
  -1,185
  -1,246
  -1,311
  -1,377
  -1,448
  -1,522
  -1,599
  -1,681
  -1,765
  -1,854
  -1,949
  -2,047
  -2,151
  -2,259
  -2,373
  -2,492
  -2,617
  -2,749
  -2,887
  -3,032
  -3,185
  -3,344
  -3,512
  -3,688
Free cash flow, $m
  2,387
  3,031
  2,995
  3,152
  3,317
  3,488
  3,668
  3,856
  4,052
  4,258
  4,474
  4,694
  4,930
  5,178
  5,438
  5,710
  5,996
  6,295
  6,609
  6,938
  7,283
  7,645
  8,025
  8,424
  8,842
  9,281
  9,742
  10,225
  10,732
  11,265
  11,824
Issuance/(repayment) of debt, $m
  993
  472
  490
  512
  535
  560
  586
  613
  642
  672
  704
  738
  773
  810
  849
  890
  934
  979
  1,027
  1,077
  1,130
  1,185
  1,244
  1,305
  1,369
  1,437
  1,508
  1,583
  1,661
  1,744
  1,830
Issuance/(repurchase) of shares, $m
  -1,536
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -911
  472
  490
  512
  535
  560
  586
  613
  642
  672
  704
  738
  773
  810
  849
  890
  934
  979
  1,027
  1,077
  1,130
  1,185
  1,244
  1,305
  1,369
  1,437
  1,508
  1,583
  1,661
  1,744
  1,830
Total cash flow (excl. dividends), $m
  1,485
  3,503
  3,485
  3,664
  3,852
  4,048
  4,254
  4,469
  4,694
  4,930
  5,178
  5,432
  5,703
  5,988
  6,287
  6,600
  6,929
  7,274
  7,635
  8,015
  8,413
  8,830
  9,269
  9,729
  10,211
  10,718
  11,250
  11,808
  12,394
  13,009
  13,654
Retained Cash Flow (-), $m
  -204
  -55
  -61
  -63
  -66
  -69
  -72
  -76
  -79
  -83
  -87
  -91
  -96
  -100
  -105
  -110
  -115
  -121
  -127
  -133
  -140
  -147
  -154
  -161
  -169
  -178
  -186
  -196
  -205
  -216
  -226
Prev. year cash balance distribution, $m
 
  3,473
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  6,921
  3,425
  3,601
  3,786
  3,979
  4,181
  4,393
  4,615
  4,847
  5,091
  5,340
  5,608
  5,888
  6,182
  6,490
  6,814
  7,153
  7,508
  7,882
  8,273
  8,684
  9,115
  9,567
  10,042
  10,540
  11,063
  11,612
  12,188
  12,793
  13,428
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  6,636
  3,135
  3,134
  3,117
  3,084
  3,035
  2,968
  2,884
  2,784
  2,669
  2,536
  2,393
  2,239
  2,075
  1,905
  1,731
  1,556
  1,383
  1,214
  1,051
  898
  756
  627
  511
  410
  323
  249
  189
  140
  101
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

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 d├ęcor, 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 July 30, 2016, the company operated a total of 3,675 stores in nine countries, which included 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 headquartered in Framingham, Massachusetts.

FINANCIAL RATIOS  of  TJX (TJX)

Valuation Ratios
P/E Ratio 22.1
Price to Sales 1.5
Price to Book 11.3
Price to Tangible Book
Price to Cash Flow 14.1
Price to Free Cash Flow 19.7
Growth Rates
Sales Growth Rate 7.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 8.6%
Cap. Spend. - 3 Yr. Gr. Rate 1.6%
Financial Strength
Quick Ratio NaN
Current Ratio 0
LT Debt to Equity 53.3%
Total Debt to Equity 53.3%
Interest Coverage 52
Management Effectiveness
Return On Assets 19.2%
Ret/ On Assets - 3 Yr. Avg. 20.4%
Return On Total Capital 35.6%
Ret/ On T. Cap. - 3 Yr. Avg. 37.5%
Return On Equity 52.1%
Return On Equity - 3 Yr. Avg. 52.5%
Asset Turnover 2.7
Profitability Ratios
Gross Margin 29%
Gross Margin - 3 Yr. Avg. 28.8%
EBITDA Margin 13.4%
EBITDA Margin - 3 Yr. Avg. 14%
Operating Margin 11.3%
Oper. Margin - 3 Yr. Avg. 11.9%
Pre-Tax Margin 11.2%
Pre-Tax Margin - 3 Yr. Avg. 11.7%
Net Profit Margin 6.9%
Net Profit Margin - 3 Yr. Avg. 7.3%
Effective Tax Rate 38.3%
Eff/ Tax Rate - 3 Yr. Avg. 37.9%
Payout Ratio 28.3%

TJX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the TJX stock intrinsic value calculation we used $33184 million for the last fiscal year's total revenue generated by TJX. The default revenue input number comes from 2017 income statement of TJX. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our TJX stock valuation model: a) initial revenue growth rate of 5.6% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for TJX is calculated based on our internal credit rating of TJX, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of TJX.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of TJX stock the variable cost ratio is equal to 88%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for TJX stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.6% for TJX.

Corporate tax rate of 27% is the nominal tax rate for TJX. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the TJX stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for TJX are equal to 13.1%.

Life of production assets of 6.9 years is the average useful life of capital assets used in TJX operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for TJX is equal to -1.4%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $4511 million for TJX - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 639.985 million for TJX is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of TJX at the current share price and the inputted number of shares is $50.3 billion.


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COMPANY NEWS

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Stock chart of TJX Financial statements of TJX
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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