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Here's How Ross Stores Stock is Poised Ahead of Q3 Earnings

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Ross Stores, Inc. (ROST - Free Report) is likely to post year-over-year top-line growth when it reports third-quarter fiscal 2025 earnings on Nov. 20, after market close. The Zacks Consensus Estimate for quarterly revenues is pegged at $5.41 billion, indicating a rise of 6.7% from the year-ago quarter’s figure.

The consensus estimate for earnings is pegged at $1.40 per share, down 5.4% from $1.48 earned in the year-earlier period. The consensus mark has risen a penny in the past seven days.

ROST has a trailing four-quarter earnings surprise of 5.1%, on average. In the last reported quarter, the company posted an earnings surprise of 2.6%.

Key Factors to Influence ROST’s Q3 Results

Ross Stores’ third-quarter fiscal 2025 performance is expected to have been supported by broad-based strength across its merchandise categories, fueled by solid customer response at both banners. Its ability to consistently deliver value-driven bargains continues to resonate with price-conscious consumers amid a cautious discretionary spending backdrop. Consistent execution of store expansion plans is also expected to have supported top-line growth.

ROST is also likely to have benefited from its off-price retail model, which attracts value-focused shoppers seeking quality brands at reduced prices. Further, the company’s micro-merchandising strategy enhances product allocation by tailoring inventory to regional preferences, helping optimize assortments and support margins. Backed by its proven business model, Ross Stores is poised to have generated increased traffic, stronger same-store sales and improved profitability for the quarter under review. 

On the last reported quarter’s earnings call, Ross Stores stated that the early back-to-school momentum will bode well for the second half of the year. As a result, the company anticipated comparable sales (comps) growth of 2-3% for the third quarter of fiscal 2025. Our model projects comps of 2.9% in the fiscal third quarter.

However, Ross Stores has been cautious regarding the ongoing macroeconomic and geopolitical uncertainties and persistent inflation, which have been impacting consumer spending on essentials like housing, food and gasoline. Ross Stores has been grappling with the tariff headwinds as evolving trade policies, prolonged inflation and elevated duties on China-sourced goods add pressure to its cost structure. 

Consequently, Ross Stores is approaching the near-term with caution amid ongoing macroeconomic and geopolitical uncertainties, anticipating impacts on profitability and margins if current tariff levels persist. Management had envisioned third-quarter fiscal 2025 EPS to decline to $1.31-$1.37 from $1.48 recorded in the prior-year period, with roughly seven-eight cents of that decline attributed to tariffs.

What the Zacks Model Unveils

Our proven model 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 before they’re reported with our Earnings ESP Filter.

Ross Stores currently has an Earnings ESP of +3.41% and a Zacks Rank of 3.

ROST’s Stock Price Performance & Valuation Picture

From a valuation perspective, Ross Stores is trading at a discount relative to industry benchmarks. The company has a forward 12-month price-to-earnings of 24.10X, lower than the Retail-Discount Stores industry’s average of 29.88X.
 
The recent market movements show that ROST’s shares have gained 10.1% in the past three months against the industry's 1.6% drop.

More Stocks With the Favorable Combination

Here are three more companies, which according to our model, have the right combination of elements to post an earnings beat this season:

The TJX Companies (TJX - Free Report) currently has an Earnings ESP of +2.87% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

The company is likely to register growth in the bottom and top lines when it reports third-quarter fiscal 2026 results. The consensus mark for TJX’s quarterly revenues is pegged at $14.9 billion, which indicates a 5.8% rise from the figure reported in the prior-year quarter.

The consensus mark for TJX’s quarterly earnings has moved up a penny in the past 30 days to $1.22 per share. The consensus estimate indicates growth of 7% from the year-ago quarter’s actual.

DICK'S Sporting Goods (DKS - Free Report) currently has an Earnings ESP of +2.39% and a Zacks Rank of 3. DKS is likely to register top-line growth when it reports third-quarter fiscal 2025 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $3.19 billion, which indicates 4.3% growth from the prior-year quarter.

The consensus estimate for earnings has fallen a couple of cents in the past seven days to $2.69 per share, which implies a 2.2% drop from the year-ago quarter's actual.

lululemon athletica (LULU - Free Report) currently has an Earnings ESP of +0.56% and a Zacks Rank of 3. 
LULU is likely to register top-line growth when it reports third-quarter fiscal 2025 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $2.49 billion, which indicates 3.8% growth from the prior-year quarter.

The consensus estimate for earnings has been stable in the past 30 days at $2.22 per share, which implies a 22.7% decrease from the year-ago quarter's actual.

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