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Will Ross Stores (ROST) Retain Positive Earnings Trend in Q2?

Ross Stores, Inc. ROST, an off-price retailer of apparel and home accessories, is scheduled to release second-quarter fiscal 2017 results on Aug 17, after the closing bell. Investors are keen to know whether this California based company will be able to continue its streak of positive earnings and revenue surprises.

In the trailing four quarters, Ross Stores has outperformed the Zacks Consensus Estimate by an average of 5.8%. In the preceding quarter, the company witnessed a positive earnings surprise of 3.8%. Let’s see how things are shaping up before this announcement.

Ross Stores, Inc. Price and EPS Surprise

Ross Stores, Inc. Price and EPS Surprise | Ross Stores, Inc. Quote

What to Expect?

The current Zacks Consensus Estimate for the quarter under review is 76 cents, reflecting a year-over-year growth of 7.5%. We note that the Zacks Consensus Estimate for the company has been stable lately. Analysts polled by Zacks expect revenues of $3.37 billion, up approximately 6% from the year-ago quarter.

Ross Stores forms part of the Retail-Wholesale sector that is currently placed at bottom 13% of the Zacks Classified sectors (14 out of 16). We note that the Retail-Wholesale sector has outperformed the broader market in the last one month. The sector gained 3.8%, while the S&P 500 index advanced 2%.

Ross Stores has underperformed the industry in the last one month. The stock has jumped 3.1% compared with the industry’s gain of 7.1%.



Factors at Play

Ross Stores has displayed a solid earnings trend lately with earnings beat recorded in 11 of the past 12 quarters. Strong earnings trend stemmed from the favorable response of value-focused customers to Ross Stores’ extensive collection of brand bargains and solid cost controls. Moreover, its solid financial status, ongoing merchandise initiatives and consistent focus on-store expansion bode well.

Further, the company provided an encouraging outlook for the second quarter and raised fiscal 2017 earnings per share view. It anticipates same-store revenues to increase 1–2% in the second quarter, while sales id expected to improve 4–5%. Earnings per share are projected in the band of 73–76 cents, an increase from 71 cents reported last year. These factors collectively underscore the company’s solid future potential.

However, the company anticipates facing challenges related to strong year-over-year earnings and sales comparisons amid macroeconomic uncertainty and a volatile retail landscape. Further, threats of stiff competition and cannibalization remain.

What the Zacks Model Unveils?

Our proven model does not conclusively show that Ross Stores is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Ross Stores has an Earnings ESP of 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 76 cents per share. While the company’s Zacks Rank #3 increases the predictive power of ESP, we need to have a positive ESP to be confident about an earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

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:

The Gap Inc. GPS has an Earnings ESP of +3.85% and a Zacks Rank of #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Burlington Stores Inc. BURL has an Earnings ESP of +6.00% and a Zacks Rank of #2.

Big Lots Inc. BIG has an Earnings ESP of +6.56% and carries a Zacks Rank of #2.

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Gap, Inc. (The) (GPS): Free Stock Analysis Report
 
Ross Stores, Inc. (ROST): Free Stock Analysis Report
 
Big Lots, Inc. (BIG): Free Stock Analysis Report
 
Burlington Stores, Inc. (BURL): Free Stock Analysis Report
 
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