GAP (NYSE:GAP – Get Free Report) and TJX Companies (NYSE:TJX – Get Free Report) are both retail/wholesale companies, but which is the better stock? We will contrast the two companies based on the strength of their valuation, risk, earnings, institutional ownership, profitability, dividends and analyst recommendations.
Dividends
GAP pays an annual dividend of $0.60 per share and has a dividend yield of 2.8%. TJX Companies pays an annual dividend of $1.50 per share and has a dividend yield of 1.3%. GAP pays out -2.2% of its earnings in the form of a dividend. TJX Companies pays out 37.2% 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. GAP is clearly the better dividend stock, given its higher yield and lower payout ratio.
Institutional & Insider Ownership
91.1% of TJX Companies shares are held by institutional investors. 0.1% of TJX Companies shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
Profitability
Net Margins | Return on Equity | Return on Assets | |
GAP | 5.05% | 28.89% | 6.92% |
TJX Companies | 8.56% | 63.19% | 15.45% |
Analyst Recommendations
This is a breakdown of recent ratings and target prices for GAP and TJX Companies, as provided by MarketBeat.com.
Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
GAP | 0 | 3 | 0 | 0 | 2.00 |
TJX Companies | 0 | 3 | 13 | 0 | 2.81 |
GAP currently has a consensus target price of $27.00, indicating a potential upside of 28.11%. TJX Companies has a consensus target price of $126.76, indicating a potential upside of 8.68%. Given GAP’s higher possible upside, equities research analysts clearly believe GAP is more favorable than TJX Companies.
Risk and Volatility
GAP has a beta of 2.35, suggesting that its share price is 135% more volatile than the S&P 500. Comparatively, TJX Companies has a beta of 0.89, suggesting that its share price is 11% less volatile than the S&P 500.
Earnings & Valuation
This table compares GAP and TJX Companies”s revenue, earnings per share and valuation.
Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
GAP | $15.17 billion | 0.52 | $502.00 million | ($27.20) | -0.77 |
TJX Companies | $54.22 billion | 2.43 | $4.47 billion | $4.03 | 28.94 |
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.
Summary
TJX Companies beats GAP on 12 of the 16 factors compared between the two stocks.
About GAP
The Gap, Inc. operates as an apparel retail company. The company offers apparel, accessories, and personal care products for men, women, and children under the Old Navy, Gap, Banana Republic, and Athleta brands. Its products include adult apparel and accessories; and fitness and lifestyle products for use in yoga, training, sports, travel, and everyday activities for women and girls. The company offers its products through company-operated stores, franchise stores, websites, and third-party arrangements. It has franchise agreements to operate Old Navy, Gap, Banana Republic, and Athleta stores and websites in Asia, Europe, Latin America, the Middle East, and Africa. The Gap, Inc. was incorporated in 1969 and is headquartered in San Francisco, California.
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.
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