| The modern department store is a retail shopping establishment offering a wide range of consumer goods under one roof. Department stores usually sell a variety of products, including clothing, furniture, home appliances, toys, cosmetics, etc. They typically allow shoppers to choose between multiple merchandise lines, at variable price points, in different product categories usually referred to as "departments". They have a long connected history with the rise of the middle class in the modern world. Today they are less ostentatious and are often found in or near local shopping malls. They are also all going online too. I wanted to take a quick look at a couple of these department stores to see if there are any worth further investigation. |  |
Data as of 9 September 2014
The TJX Companies, Inc. (TJX) operates as an off-price apparel and home fashions retailer in the United States and internationally. The company operates in four segments: Marmaxx, HomeGoods, TJX Canada, and TJX Europe. Its apparel and home fashions chains sell family apparel, including footwear and accessories; fine jewelry and accessories; and home fashions comprising home basics, accent furniture, lamps, rugs, wall décor, decorative accessories, and giftware, as well as other merchandise. The company operates its stores under the T.J. Maxx, Marshalls, HomeGoods, Winners, HomeSense, T.K. Maxx, and Sierra Trading Post trademarks. The TJX Companies, Inc. also sells its products through tjmaxx.com and SierraTradingPost.com in the United States, as well as through tkmaxx.com in Europe. As of February 1, 2014, it operated 1,079 T.J. Maxx, 942 Marshalls, 450 HomeGoods, and 4 Sierra Trading Post stores in the United States; 227 Winners, 91 HomeSense, and 27 Marshalls stores in Canada; and 371 T.K. Maxx and 28 HomeSense stores in Europe. The company was founded in 1956 and is headquartered in Framingham, Massachusetts. (Daily Chart) (Weekly Chart)
| Price $59.72 1yr Target $65.04 No. of Analysts 25 1yr Cap Gain 8.90% Dividend $0.70 Yield 1.17% 1yr Tot Return 10.07% P/E Ratio 19.64 PEG 1.73 | EPS (ttm) $4.08 Div Payout Ratio 17.15% EPS next year $4.73 Forward P/E Ratio 12.54 ROA 6.00% ROE 14.70% 3yr RevGR 7.63% 3yr EarnGR 21.00% 3yr DivGR 24.30% |
First Look: The TJX Companies have a lot going for them. They sell a large variety of merchandise at various price points under various department store names. The one year capital gain is acceptable and the yield in marginal, but together they result in a one year return on shareholder investment of over 10%. Yet that low yield will scare away a lot of dividend growth investors. On the plus side, the stock has a P/E ratio of less than 20, a forward P/E of less than 13, and a 3 year dividend growth rate of 24.30%. I believe there's enough data here to necessitate further analysis in a future article.
Macy's, Inc. (M), together with its subsidiaries, operates stores and Internet Websites in the United States. Its stores and Websites sell a range of merchandise, including apparel and accessories for men, women, and children; cosmetics; home furnishings; and other consumer goods. The company also operates Bloomingdale’s Outlet stores that offer a range of apparel and accessories, including women's ready-to-wear, fashion accessories, jewelry, handbags, and intimate apparel, as well as men's, children's, and women's shoes. As of February 25, 2014, it operated approximately 840 stores under the Macy's and Bloomingdale's names in 45 states of the United States, the District of Columbia, Guam, and Puerto Rico, as well as the macys.com and bloomingdales.com Websites; and 13 Bloomingdale's Outlet stores. The company was formerly known as Federated Department Stores, Inc. and changed its name to Macy’s, Inc. in June 2007. Macy’s, Inc. was founded in 1830 and is headquartered in Cincinnati, Ohio. (Daily Chart) (Weekly Chart)
| Price $60.43 1yr Target $64.62 No. of Analysts 17 1yr Cap Gain 6.93% Dividend $1.25 Yield 2.06% 1yr Tot Return 8.99% P/E Ratio 15.00 PEG 1.19 | EPS (ttm) $4.03 Div Payout Ratio 31.01% EPS next year $5.01 Forward P/E Ratio 12.06 ROA 7.00% ROE 25.50% 3yr RevGR 3.72% 3yr EarnGR 24.64% 3yr DivGR 70.08% |
First Look: There's not a more famous name in department stores than Macy's. As a result it automatically requires additional investigation in a future article. But more than that, the stock has a dividend yield above 2%, a P/E ratio of 15, a forward P/E just above 12, and a 3 year dividend growth rate above 70% (although that dividend growth rate is suspect and needs further investigation).
Kohl’s Corporation (KSS) operates department stores in the United States. It offers exclusive and national brand apparel, footwear, accessories, beauty, and soft home products to children, men, and women customers. As of February 1, 2014, it operated 1,158 family-oriented department stores and a Website, Kohls.com. Kohl’s Corporation was founded in 1962 and is headquartered in Menomonee Falls, Wisconsin. (Daily Chart) (Weekly Chart)
| Price $59.28 1yr Target $59.81 No. of Analysts 21 1yr Cap Gain 0.89% Dividend $1.56 Yield 2.63% 1yr Tot Return 3.52% P/E Ratio 14.53 PEG 2.55 | EPS (ttm) $4.08 Div Payout Ratio 38.23% EPS next year $4.73 Forward P/E Ratio 12.54 ROA 6.00% ROE 14.70% 3yr RevGR 1.13% 3yr EarnGR 3.39% 3yr DivGR 78.21% |
First Look: At first blush Kohl's just doesn't appear to present a sufficient case for investment. Although the yield is above 2% and the P/E ratio is below 15 (both pluses), the 3 year earnings growth rate seems subpar and the 3 year dividend growth rate is suspect. While there may be something to this stock, there's just too many more companies with better fundamentals worth investigating. In the meantime, I'll just put this one off to the side and relook the fundamentals again in about 6 months.
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