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Can Ross Stores (ROST) Retain Positive Earnings Trend in Q1?


Ross Stores, Inc. ROST is slated to report first-quarter fiscal 2018 results on May 23, after the market closes. In the last reported quarter, the company witnessed a positive earnings surprise of 5.4%.

In the trailing four quarters, Ross Stores outperformed the Zacks Consensus Estimate by an average of 6.1%, with a positive surprise in each quarter. Let’s see how things are shaping up before this announcement.

What to Expect?

Investors are keen to know whether this California-based company will be able to continue its streak of positive earnings and revenue surprises. The Zacks Consensus Estimate for first-quarter earnings is pegged at $1.06, reflecting year-over-year growth of 29.3%. Notably, earnings estimates for the current quarter have been stable over the last 30 days. Analysts polled by Zacks expect revenues of $3.53 billion, up approximately 6.9% from the year-ago quarter.

Ross Stores, Inc. Price, Consensus and EPS Surprise

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

Ross Stores has rallied 5.7% in the past month, against the industry’s decline of 0.1%. This reflects a positive sentiment on the stock, ahead of earnings.

Factors at Play

Ross Stores has been continuing with its upbeat performance, recording positive earnings and sales surprises for the last seven quarters. The company is gaining from continually delivering broad assortments of compelling bargains to value-focused customers.

Further, the company’s solid endeavors, including better price management, merchandising initiatives, cost containment and store-expansion plans, position it for growth. Ross Stores’ off-price model renders strong value proposition and micro-merchandising that drive better product allocation and margins. This, in turn, will help the company to sustain top-line growth trends.

Additionally, Ross Stores remains focused on its merchandising efforts through investments in workforce, processes and technology. In fact, the company has been committed to improving its merchandise assortments in the ladies’ apparel business. These initiatives strengthen Ross Stores’ buying operation, facilitating the purchase of in-trend merchandise at attractive prices.

For first-quarter fiscal 2018, the company expects comps to increase 1-2% alongside sales growth of 6-7%. Further, it projects earnings per share of $1.03-$1.07 versus 82 cents reported in the prior-year quarter. These factors make us optimistic about the company’s results in the to-be-reported quarter.

What the Zacks Model Unveils

Our proven model shows 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Ross Stores currently has an Earnings ESP of +1.17% and a Zacks Rank #3.

Other Stocks Poised to Beat Earnings Estimates

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

Urban Outfitters Inc. URBN has an Earnings ESP of +2.52% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Best Buy Co. Inc. BBY has an Earnings ESP of +2.01% and a Zacks Rank of 2.

J.C. Penney Company Inc. JCP has an Earnings ESP of +11.01% and a Zacks Rank #3.

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