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Strong Core Business to Aid Ross Stores' (ROST) Q3 Earnings
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Ross Stores, Inc. (ROST - Free Report) is scheduled to release its third-quarter fiscal 2023 results on Nov 16. The off-price apparel and home accessories retailer is likely to have witnessed revenue and earnings growth in the to-be-reported quarter.
The Zacks Consensus Estimate for fiscal third-quarter revenues is pegged at $4.8 billion, indicating growth of 5.8% from the figure reported in the year-ago quarter. For fiscal third-quarter earnings, the consensus mark of $1.21 per share suggests growth of 21% from the year-ago quarter's reported number. The consensus mark for earnings has been unchanged in the past 30 days.
In the last reported quarter, Ross Stores delivered an earnings surprise of 12.8%. In the trailing four quarters, it delivered an earnings beat of 11.4%, on average.
Ross Stores has been benefiting from robust customer demand and recovery from supply-chain headwinds in the retail industry. Sales in the fiscal third quarter are likely to have benefited from broad-based growth across merchandise categories and regions. Gains at the core business, driven by consumers' continued focus on value and the company’s ability to deliver value bargains to customers, bode well.
Our model predicts comparable store sales to increase 2.6% year over year in the fiscal third quarter, driven by strength across its namesake and dd's DISCOUNTS business formats.
On its last reported quarter’s earnings call, Ross Stores was optimistic about its third-quarter fiscal 2023 performance. The company expects comps to be up 2-3% year over year for third-quarter fiscal 2023, while total sales are forecast to increase 4-6% year over year. The bottom line is envisioned to be $1.16-$1.21 per share for the fiscal third quarter.
We estimate the operating margin to expand 60 bps to 10.4% in the to-be-reported quarter. On a dollar basis, operating profit is expected to increase 12.1% year over year in the fiscal third quarter.
Ross Stores has been consistent with the execution of its store expansion plans, which are likely to have aided the top line. The company's store expansion efforts have been focused on continually increasing penetration in existing and new markets. The third-quarter fiscal 2023 performance is anticipated to have gained from ROST’s return to normal store opening targets. Gains from new stores are expected to get reflected in ROST’s sales for the fiscal third quarter.
However, Ross Stores has been witnessing the effects of the ongoing financial pressures on dd’s DISCOUNTS’ lower-income customer base and increased markdowns. The escalating inflationary pressures are likely to have affected dd's DISCOUNTS’ revenues and comps in the to-be-reported quarter.
Further, Ross Stores’ cost of goods sold is likely to have witnessed the continued impacts of lower merchandise margins, unfavorable timing of pack-away-related costs and increased markdowns. Unfavorable timing of pack-away-related expenses and deleverage from its new distribution center are expected to have led to higher distribution costs.
Additionally, increased incentive compensation expenses are likely to have led to higher SG&A expenses, affecting the operating margin performance in the to-be-reported quarter.
Our model predicts the cost of goods sold to increase 3.3% year over year to $3.5 billion in the fiscal third quarter. As a percentage of sales, we expect SG&A expenses to increase 90 basis points to 16.1% in the fiscal third quarter. In dollar terms, SG&A expenses are expected to rise 11.6% year over year to $773.7 million.
Zacks Model
Our proven model conclusively predicts 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 an Earnings ESP of +2.08% and a Zacks Rank #2.
Other Stocks With Favorable Combination
Here are some other companies you may want to consider, as our model shows that these also have the right combination of elements to post an earnings beat:
American Eagle (AEO - Free Report) has an Earnings ESP of +5.50% and currently flaunts a Zacks Rank #1. The company is likely to register growth in the top and bottom lines when it reports third-quarter fiscal 2023 numbers. The consensus mark for AEO’s quarterly earnings has moved up by a penny to 47 cents per share in the past seven days. The consensus estimate suggests 11.9% growth from the year-ago quarter’s reported number.
The Zacks Consensus Estimate for American Eagle’s quarterly revenues is pegged at $1.28 billion, which suggests growth of 2.8% from the figure reported in the prior-year quarter.
Walmart (WMT - Free Report) currently has an Earnings ESP of +0.63% and a Zacks Rank #2. The company is likely to register growth in the top and bottom lines when it reports third-quarter fiscal 2023 results. The consensus mark for WMT’s quarterly revenues is pegged at $159.2 billion, which suggests 4.2% growth from the figure reported in the prior-year quarter.
The consensus mark for WMT’s quarterly earnings has moved up by a penny in the past seven days to $1.51 per share. The consensus estimate suggests growth of 0.7% from the year-ago quarter’s actual.
The TJX Companies (TJX - Free Report) currently has an Earnings ESP of +2.60% and a Zacks Rank of 3. The company is likely to register top and bottom-line growth when it reports third-quarter fiscal 2023 results. The consensus mark for TJX’s quarterly revenues is pegged at $13.1 billion, which suggests growth of 7.3% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for TJX’s earnings has been unchanged at 97 cents per share in the past 30 days. The consensus estimate indicates 12.8% growth from the year-ago quarter’s reported figure.
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Strong Core Business to Aid Ross Stores' (ROST) Q3 Earnings
Ross Stores, Inc. (ROST - Free Report) is scheduled to release its third-quarter fiscal 2023 results on Nov 16. The off-price apparel and home accessories retailer is likely to have witnessed revenue and earnings growth in the to-be-reported quarter.
The Zacks Consensus Estimate for fiscal third-quarter revenues is pegged at $4.8 billion, indicating growth of 5.8% from the figure reported in the year-ago quarter. For fiscal third-quarter earnings, the consensus mark of $1.21 per share suggests growth of 21% from the year-ago quarter's reported number. The consensus mark for earnings has been unchanged in the past 30 days.
In the last reported quarter, Ross Stores delivered an earnings surprise of 12.8%. In the trailing four quarters, it delivered an earnings beat of 11.4%, on average.
Ross Stores, Inc. Price and EPS Surprise
Ross Stores, Inc. price-eps-surprise | Ross Stores, Inc. Quote
Key Factors to Note
Ross Stores has been benefiting from robust customer demand and recovery from supply-chain headwinds in the retail industry. Sales in the fiscal third quarter are likely to have benefited from broad-based growth across merchandise categories and regions. Gains at the core business, driven by consumers' continued focus on value and the company’s ability to deliver value bargains to customers, bode well.
Our model predicts comparable store sales to increase 2.6% year over year in the fiscal third quarter, driven by strength across its namesake and dd's DISCOUNTS business formats.
On its last reported quarter’s earnings call, Ross Stores was optimistic about its third-quarter fiscal 2023 performance. The company expects comps to be up 2-3% year over year for third-quarter fiscal 2023, while total sales are forecast to increase 4-6% year over year. The bottom line is envisioned to be $1.16-$1.21 per share for the fiscal third quarter.
We estimate the operating margin to expand 60 bps to 10.4% in the to-be-reported quarter. On a dollar basis, operating profit is expected to increase 12.1% year over year in the fiscal third quarter.
Ross Stores has been consistent with the execution of its store expansion plans, which are likely to have aided the top line. The company's store expansion efforts have been focused on continually increasing penetration in existing and new markets. The third-quarter fiscal 2023 performance is anticipated to have gained from ROST’s return to normal store opening targets. Gains from new stores are expected to get reflected in ROST’s sales for the fiscal third quarter.
However, Ross Stores has been witnessing the effects of the ongoing financial pressures on dd’s DISCOUNTS’ lower-income customer base and increased markdowns. The escalating inflationary pressures are likely to have affected dd's DISCOUNTS’ revenues and comps in the to-be-reported quarter.
Further, Ross Stores’ cost of goods sold is likely to have witnessed the continued impacts of lower merchandise margins, unfavorable timing of pack-away-related costs and increased markdowns. Unfavorable timing of pack-away-related expenses and deleverage from its new distribution center are expected to have led to higher distribution costs.
Additionally, increased incentive compensation expenses are likely to have led to higher SG&A expenses, affecting the operating margin performance in the to-be-reported quarter.
Our model predicts the cost of goods sold to increase 3.3% year over year to $3.5 billion in the fiscal third quarter. As a percentage of sales, we expect SG&A expenses to increase 90 basis points to 16.1% in the fiscal third quarter. In dollar terms, SG&A expenses are expected to rise 11.6% year over year to $773.7 million.
Zacks Model
Our proven model conclusively predicts 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 an Earnings ESP of +2.08% and a Zacks Rank #2.
Other Stocks With Favorable Combination
Here are some other companies you may want to consider, as our model shows that these also have the right combination of elements to post an earnings beat:
American Eagle (AEO - Free Report) has an Earnings ESP of +5.50% and currently flaunts a Zacks Rank #1. The company is likely to register growth in the top and bottom lines when it reports third-quarter fiscal 2023 numbers. The consensus mark for AEO’s quarterly earnings has moved up by a penny to 47 cents per share in the past seven days. The consensus estimate suggests 11.9% growth from the year-ago quarter’s reported number.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for American Eagle’s quarterly revenues is pegged at $1.28 billion, which suggests growth of 2.8% from the figure reported in the prior-year quarter.
Walmart (WMT - Free Report) currently has an Earnings ESP of +0.63% and a Zacks Rank #2. The company is likely to register growth in the top and bottom lines when it reports third-quarter fiscal 2023 results. The consensus mark for WMT’s quarterly revenues is pegged at $159.2 billion, which suggests 4.2% growth from the figure reported in the prior-year quarter.
The consensus mark for WMT’s quarterly earnings has moved up by a penny in the past seven days to $1.51 per share. The consensus estimate suggests growth of 0.7% from the year-ago quarter’s actual.
The TJX Companies (TJX - Free Report) currently has an Earnings ESP of +2.60% and a Zacks Rank of 3. The company is likely to register top and bottom-line growth when it reports third-quarter fiscal 2023 results. The consensus mark for TJX’s quarterly revenues is pegged at $13.1 billion, which suggests growth of 7.3% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for TJX’s earnings has been unchanged at 97 cents per share in the past 30 days. The consensus estimate indicates 12.8% growth from the year-ago quarter’s reported figure.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.