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Here's How Ross Stores (ROST) is Placed Ahead of Q2 Earnings
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Ross Stores, Inc. (ROST - Free Report) is scheduled to release second-quarter fiscal 2021 results on Aug 19. The off-price retailer of apparel and home accessories is likely to have witnessed revenue and earnings growth in the to-be-reported quarter.
The Zacks Consensus Estimate for fiscal second-quarter earnings of 94 cents per share suggests substantial growth from a loss per share of 13 cents reported in the year-ago quarter. The consensus mark has been unchanged in the past 30 days. The consensus mark for revenues is pegged at $4.43 billion, indicating growth of 64.9% from the figure reported in the year-ago quarter.
In the last reported quarter, the company delivered a negative earnings surprise of 48.9%. It delivered a negative earnings surprise of 33.5%, on average, in the trailing four quarters.
Ross Stores has been witnessing accelerated demand trends after the easing of the COVID-led restrictions, which is aiding its earnings and sales. The momentum from strong customer demand, accelerated vaccination, and easing of restrictions is likely to have aided results in the fiscal second quarter. On the last reported quarter’s earnings call, management predicted that the tailwinds from the pent-up consumer demand and the return of consumers to stores for shopping will continue to aid sales trends through the rest of the year.
Earnings are also expected to have benefited from COGS leverage, rebound in operating margin, stringent inventory management and reduced Packaway. Improved merchandise margins and leverage in occupancy expenses are expected to have driven gross margin growth. The company’s inventory management efforts are also expected to have contributed to its earnings performance in the fiscal second quarter.
On the last reported quarter’s earnings call, management predicted earnings per share of 80-89 cents for the second quarter of fiscal 2021. Sales are anticipated to increase 9-12%, with comps growth of 5-7%. It expects operating margin of 9.2-9.9% for the fiscal second quarter.
However, headwinds related to higher freight costs, distribution expenses, buying costs, supply-chain constraints and COVID-related expenses are expected to have weighed on margins. Ross Stores has been witnessing costs related to COVID-19 for some time now, which have been resulting in higher SG&A expenses. Impacts on SG&A expenses mainly include higher operating expenses associated with the pandemic-related cleaning protocols and higher incentive costs. Additionally, impacts from an increase in freight costs, driven by industry-wide supply-chain congestions, elevated distribution expenses on higher wages, and a rise in buying costs are other headwinds.
On the last reported quarter’s earnings call, management stated that cost headwinds from coronavirus-related expenses, wage increases, and rising freight costs will persist through the rest of fiscal 2021. Consequently, the company’s operating margin view for the fiscal second quarter is softer than that reported in the comparable fiscal 2019 period.
The company predicts COVID-related expenses to mar operating margin by nearly 100 bps in the fiscal second quarter as it returns to pre-pandemic store operating standards, while continuing to maintain many of the additional cleaning routines.
Zacks Model
Our proven model does not conclusively predict an earnings beat for Ross Stores this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Ross Stores has a Zacks Rank #3 and an Earnings ESP of 0.00%.
Stocks With Favorable Combination
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:
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Here's How Ross Stores (ROST) is Placed Ahead of Q2 Earnings
Ross Stores, Inc. (ROST - Free Report) is scheduled to release second-quarter fiscal 2021 results on Aug 19. The off-price retailer of apparel and home accessories is likely to have witnessed revenue and earnings growth in the to-be-reported quarter.
The Zacks Consensus Estimate for fiscal second-quarter earnings of 94 cents per share suggests substantial growth from a loss per share of 13 cents reported in the year-ago quarter. The consensus mark has been unchanged in the past 30 days. The consensus mark for revenues is pegged at $4.43 billion, indicating growth of 64.9% from the figure reported in the year-ago quarter.
In the last reported quarter, the company delivered a negative earnings surprise of 48.9%. It delivered a negative earnings surprise of 33.5%, on average, in the trailing four quarters.
Ross Stores, Inc. Price and EPS Surprise
Ross Stores, Inc. price-eps-surprise | Ross Stores, Inc. Quote
Factors to Note
Ross Stores has been witnessing accelerated demand trends after the easing of the COVID-led restrictions, which is aiding its earnings and sales. The momentum from strong customer demand, accelerated vaccination, and easing of restrictions is likely to have aided results in the fiscal second quarter. On the last reported quarter’s earnings call, management predicted that the tailwinds from the pent-up consumer demand and the return of consumers to stores for shopping will continue to aid sales trends through the rest of the year.
Earnings are also expected to have benefited from COGS leverage, rebound in operating margin, stringent inventory management and reduced Packaway. Improved merchandise margins and leverage in occupancy expenses are expected to have driven gross margin growth. The company’s inventory management efforts are also expected to have contributed to its earnings performance in the fiscal second quarter.
On the last reported quarter’s earnings call, management predicted earnings per share of 80-89 cents for the second quarter of fiscal 2021. Sales are anticipated to increase 9-12%, with comps growth of 5-7%. It expects operating margin of 9.2-9.9% for the fiscal second quarter.
However, headwinds related to higher freight costs, distribution expenses, buying costs, supply-chain constraints and COVID-related expenses are expected to have weighed on margins. Ross Stores has been witnessing costs related to COVID-19 for some time now, which have been resulting in higher SG&A expenses. Impacts on SG&A expenses mainly include higher operating expenses associated with the pandemic-related cleaning protocols and higher incentive costs. Additionally, impacts from an increase in freight costs, driven by industry-wide supply-chain congestions, elevated distribution expenses on higher wages, and a rise in buying costs are other headwinds.
On the last reported quarter’s earnings call, management stated that cost headwinds from coronavirus-related expenses, wage increases, and rising freight costs will persist through the rest of fiscal 2021. Consequently, the company’s operating margin view for the fiscal second quarter is softer than that reported in the comparable fiscal 2019 period.
The company predicts COVID-related expenses to mar operating margin by nearly 100 bps in the fiscal second quarter as it returns to pre-pandemic store operating standards, while continuing to maintain many of the additional cleaning routines.
Zacks Model
Our proven model does not conclusively predict an earnings beat for Ross Stores this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Ross Stores has a Zacks Rank #3 and an Earnings ESP of 0.00%.
Stocks With Favorable Combination
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:
Walmart Inc. (WMT - Free Report) currently has an Earnings ESP of +1.14% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
DICK’S Sporting Goods, Inc. (DKS - Free Report) has an Earnings ESP of +1.66% and a Zacks Rank #2 at present.
The TJX Companies, Inc. (TJX - Free Report) currently has an Earnings ESP of +4.06% and a Zacks Rank #2.