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Factors Setting the Tone for Ross Stores' (ROST) Q4 Earnings

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Ross Stores, Inc. ROST is scheduled to release fourth-quarter fiscal 2019 results on Mar 3. The off-price retailer of apparel and home accessories delivered a positive earnings surprise of 6.2% in the last reported quarter. Also, its earnings outperformed the Zacks Consensus Estimate by 3.8% on average in the trailing four quarters.

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at $1.26, suggesting an increase of 5% from the year-ago period’s reported figure. Notably, the consensus estimate has gone up by a penny over the past 30 days. Moreover, the consensus mark for revenues is pegged at $4.37 billion, indicating growth of 6.4% from the figure reported in the year-ago quarter.

Ross Stores, Inc. Price and EPS Surprise

 

Factors to Note

Ross Stores’ commitment toward pricing, merchandise initiatives, cost containment and store expansion bode well. Notably, the company has been witnessing a decent comps trend over the past few quarters mainly on improved performance across categories and geographic regions. On its last earnings call, management had guided comps growth of 1-2% for the fourth quarter.

The company has a proven business model as the competitive bargains it offers continue to make its stores attractive for customers. Further, the solid execution of the off-price strategy is expected to have boosted top and bottom lines in the quarter under review. The company expects top-line growth of 5-6% for the fiscal fourth quarter. Management envisions earnings per share of $1.20-$1.25 for the quarter, the mid-point of which ($1.23) suggests an increase from $1.20 reported in the year-ago period.

Despite these tailwinds, its margins are expected to reflect any deleverage in cost of goods sold and SG&A expenses. Ross Stores expects operating margin of 13-13.2%, whereas it reported 13.2% in the prior-year quarter.

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 chances 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 +0.09%.

Other Stocks With Favorable Combination

Here are some other companies that you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat:

Costco Wholesale Corporation COST currently has an Earnings ESP of +0.20% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Burlington Stores (BURL - Free Report) presently has an Earnings ESP of +0.02% and a Zacks Rank #2.

Casey’s General Stores CASY currently has an Earnings ESP of +3.45% and a Zacks Rank #3.

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