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Can Ross (ROST) Maintain Positive Trend with Q1 Earnings?

Ross Stores Inc. ROST is slated to release first-quarter fiscal 2016 results on May 19. Last quarter, the company had delivered a positive earnings surprise of 3.1%. In fact, the company has outperformed the Zacks Consensus Estimate by an average of 4.6% over the trailing four quarters. Let’s see how things are shaping up for this announcement.



Factors Influencing this Quarter

Ross Stores, which has been gaining from the favorable response of value-focused customers to its extensive collection of brand bargains and efficient cost controls, remains confident of its future performance. However, management had issued a cautious outlook for fiscal 2016, as it expects to face challenges related to strong comparisons, amid macroeconomic uncertainty and a volatile retail landscape.

For the first quarter, the company projects earnings in the range of 69–72 cents per share, reflecting flat to 4% year-over-year growth. Total sales are expected to increase 4–5%, with comparable store sales rising 1–2%.

Earnings Whispers

Our proven model does not conclusively show that Ross is likely to beat earnings this quarter. This is because a stock needs to have both a positive  Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:

Zacks ESP: Earnings ESP for Ross Stores is currently pegged at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 73 cents.

Zacks Rank: Ross Stores’ Zacks Rank #3 (Hold) increases the predictive power of ESP. However, the company’s ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks Poised to Beat Earnings Estimates

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Best Buy Co., Inc. BBY, which is scheduled to release earnings on May 24, 2016, currently carries a Zacks Rank #2 (Buy) and an Earnings ESP of +2.94%.

DSW Inc. DSW, slated to release earnings on May 24, 2016, currently carries a Zacks Rank #3 and an Earnings ESP of +2.17%.

PVH Corp. PVH, slated to release earnings on May 25, 2016, currently carries a Zacks Rank #3 and an Earnings ESP of +1.40%.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
DSW INC CL-A (DSW): Free Stock Analysis Report
 
BEST BUY (BBY): Free Stock Analysis Report
 
ROSS STORES (ROST): Free Stock Analysis Report
 
PVH CORP (PVH): Free Stock Analysis Report
 
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