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Will Ross Stores (ROST) Q3 Earnings Ruin its Solid Trend?

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Ross Stores Inc. (ROST - Free Report) is slated to report third-quarter fiscal 2016 results on Nov 17. Last quarter, the company delivered a positive earnings surprise of 5.9%. It has outperformed the Zacks Consensus Estimate by an average of 3.8% in the trailing four quarters. Let’s see how things are shaping up for this announcement.

ROSS STORES Price and EPS Surprise

ROSS STORES Price and EPS Surprise | ROSS STORES Quote

Factors Influencing This Quarter

Ross Stores’ strategy to keep itself on the growth trajectory involves a continued focus on merchandising organization through investments in workforce, processes and technology. After witnessing a decent first-half fiscal 2016, the company stated that it remains committed to improve its merchandise assortments in the ladies’ apparel business, which struggled in the spring season. However, the company expected the second half of fiscal 2016 to face challenges related to strong year-over-year comparisons amid macroeconomic uncertainty and a volatile retail landscape. Hence, we prefer to wait and see if Ross Stores can counter these obstacles and continue with its strong performance this time around.

For the fiscal third quarter, the company envisions earnings in the range of 52−55 cents per share compared with 53 cents earned in the prior-year quarter.

Earnings Whispers

Our proven model does not conclusively show that Ross Stores 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: Ross Stores currently has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 56 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

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

Stocks that Warrant a Look

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:

Dick's Sporting Goods Inc. (DKS - Free Report) , which is scheduled to release earnings on Nov 15, has an Earnings ESP of +2.38%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Hibbett Sports Inc. (HIBB - Free Report) , with a Zacks Rank #2 (Buy), is expected to report earnings on Nov 18 and currently has an Earnings ESP of +4.00%.

Urban Outfitters Inc. (URBN - Free Report) , with a Zacks Rank #3 (Hold), is scheduled to release earnings on Nov 22 and has an Earnings ESP of +4.55%.

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