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Off-Price Retailers: What the Majority of Analysts Are Saying

Sharon Bailey

Can Off-Price Retailers Keep Running Strong in 2016?

(Continued from Prior Part)

Performance in 2016

As of March 24, 2016, the stock prices of off-price retailers TJX Companies (TJX), Ross Stores (ROST), and Burlington Stores (BURL) appreciated by 8.9%, 5.6%, and 24.4%, respectively, YTD (year-to-date). Burlington Stores’ stock price received a major boost on January 12, following the reaffirmation of its previous guidance for fiscal 4Q15 and fiscal 2015 (ending January 30, 2016). The stock price of Nordstrom (JWN), which also operates the off-price Nordstrom Rack stores, appreciated by 11.6% YTD as of March 24.

Burlington Stores also outperformed the S&P 500 Index, which has appreciated by 11.6% YTD. The Consumer Discretionary Select Sector SPDR Fund (XLY) has appreciated by 1% during the same period.

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Analyst recommendations for TJX Companies and Ross Stores

The majority of analysts are rating off-price retailers TJX Companies, Ross Stores, and Burlington Stores as “buys,” reflecting the strength of the off-price business model. Let’s look at the individual ratings.

The following is an analyst breakdown for TJX Companies:

  • Out of the 33 analysts covering TJX Companies, 26 analysts rate it as a “buy,” and seven have a “hold” recommendation. None of the analysts have a sell recommendation.

  • The 12-month price target of $82.75 for TJX Companies, reflects a 7.3% upside potential compared to the company’s stock price of $77.12 on March 24.

The following is an analyst breakdown for Ross Stores:

  • About 53%, or 16 out of 30 analysts, have issued a “buy” recommendation for Ross Stores, with 14 analysts issuing a “hold,” and none with a “sell” recommendation.

  • As of March 24, Ross Stores was trading at a stock price of $57.41. Over a 12-month period, analysts expect the stock to grow by 5.8% to $60.74.

Analyst recommendations for Burlington and Nordstrom:

The following is an analyst breakdown for Burlington Stores:

  • Burlington Stores has a “buy” recommendation from 12 out of 14 analysts and “hold” recommendation from two analysts.

  • The 12-month price target for Burlington’s stock is $62.75, reflecting a 16.7% upside potential from the current stock price of $53.75.

The following is an analyst breakdown for Nordstrom:

  • Out of 31 analysts, 19 analysts have a “hold” recommendation, eight have a “buy” recommendation, and four have a “sell” rating.

  • Nordstrom’s off-price Rack stores were a key growth driver for the company in the recent years. However, in fiscal 2015 the same-store sales of Nordstrom Rack stores declined by 1%, compared to a 3.8% growth in fiscal 2014.

  • Analysts expect Nordstrom’s stock price to decline by 6.2% over the forward 12-month period to $52.48.

Notably, the iShares Russell Top 200 Growth ETF (IWY) has 0.7% exposure to TJX Companies.

We’ll discuss the valuations of these major off-price retailers in the concluding part of our series.

Continue to Next Part

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