1. The TJX Companies is a Fortune 200 company with 3,860 stores worldwide under half a dozen retail brand names, including clothing stores such as TJ Maxx and Marshall’s. The TJX Companies have fiscal year (FY) that ends in January of each year. The following are TJX’s historical (A) and estimated (E) earnings per share (EPS) and dividend per share (DPS). The book value per share of TJX at the beginning of FY 2018 was $3.50.
FY 2018A |
FY 2019A |
FY 2020E |
FY 2021E |
FY 2022E |
|
EPS |
2.07 |
2.43 |
2.61 |
2.82 |
3.04 |
DPS |
0.59 |
0.73 |
0.88 |
1.02 |
1.18 |
Assume that TJX has an equity cost of capital of 10 percent per annum and there are no additional shareholder equity transactions.
C. Calculate the year over year (YOY) forecasted growth rates in TJX’s residual earnings (RE) growth rates for the period FY 2018 – FY 2022. (2 points)
FY 2018A | FY 2019A | FY 2020E | FY 2021E | FY 2022E | ||
EPS | 2.07 | 2.43 | 2.61 | 2.82 | 3.04 | |
DPS | 0.59 | 0.73 | 0.88 | 1.02 | 1.18 | |
Residula Earnings per share | 1.48 | 1.70 | 1.73 | 1.80 | 1.86 | |
(EPS - DPS) | ||||||
YOY Growth Rate | N.A | 14.86% | 1.76% | 4.05% | 3.33% | |
(1.70 - 1.48)/1.48 | (1.73 - 1.70)/1.70 | (1.80 - 1.73)/1.73 | (1.86 - 1.80)/1.80 |
1. The TJX Companies is a Fortune 200 company with 3,860 stores worldwide under half a dozen retail brand names, inclu...