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Is Ross Stores (ROST) Ready to Beat Q1 Earnings Estimates?

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Ross Stores (ROST - Free Report) saw its stock price pop marginally on Wednesday as part of a month-long climb that has seen shares of the off-price clothing retailer surge nearly 6%. Now, let’s see if Ross’ run looks poised to continue by taking a quick look at its first-quarter earnings outlook.

Over the last year, shares of Ross have surged nearly 33%, outpacing its industry’s climb of roughly 23%—which includes the likes of Burlington Stores (BURL - Free Report) and TJX Companies (TJX - Free Report) . Ross also crushed the S&P 500’s 13.4% climb.

With that said, Ross stock could stall if the company reports lower-than-expected first quarter financial results Thursday. Ross might be under even more pressure since fellow brick-and-mortar retailers Macy’s (M), Nordstrom (JWN - Free Report) , J.C. Penny (JCP - Free Report) , Kohl's (KSS - Free Report) , and Target (TGT - Free Report) have all reported their Q1 earnings, with mixed results. This means investors need to pay close attention to Ross’ most up-to-date top and bottom line estimates.

Q1 Outlook

Ross is projected to report quarterly revenues of $3.53 billion, based on our current Zacks Consensus Estimates. This would mark a 6.9% climb from the year-ago period. Meanwhile, the company’s adjusted quarterly earnings are expected to soar by 29.27% to reach $1.06 per share.

However, investors also need to understand what chance Ross has to top our earnings estimate as this could help its stock price keep on moving upward, while a miss could lead to a decline—at least in the near-term.  

Luckily, Zacks Premium customers can utilize the Earnings ESP Screener in order to search for stocks that are expected to surprise, either way. This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.

A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.

In contrast, a stock with a Zacks Rank #3 (Hold) or worse, coupled with a negative Earnings ESP, is one that we typically want to avoid during earnings season.

Heading into Thursday, Ross’ Most Accurate Estimate—the representation of the most recent analyst sentiment—called for earnings of $1.07 per share, which comes in 1 cent above our current consensus estimate.

Ross is also currently a Zacks Rank #3 (Hold) and sports an Earnings ESP of 1.17%, meaning investors can consider ROST a stock that could top quarterly earnings estimates when it reports its Q1 financial results after market close on Thursday.  

Investors should also note that Ross has topped quarterly earnings estimates in the trailing 15 quarters.

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