Ross Stores Shows Strength Before Q4 Earnings: Is a Surprise in Store?

Ross Stores, Inc. ROST is expected to register a decline in its top and bottom lines when it reports fourth-quarter fiscal 2024 earnings on March 4, after market close. The Zacks Consensus Estimate for earnings is pegged at $1.65 per share, suggesting a 9.3% drop from $1.82 reported in the year-earlier period. The consensus mark has been unchanged in the past 30 days.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.Ross Stores, Inc. Price, Consensus and EPS Surprise Ross Stores, Inc. price-consensus-eps-surprise-chart | Ross Stores, Inc. QuoteThe consensus estimate for quarterly revenues is pegged at $5.95 billion, indicating a decline of 1.2% from the year-ago quarter’s reported figure.ROST has a trailing four-quarter earnings surprise of 8.5%, on average. In the last reported quarter, the company posted an earnings surprise of 6.5%.Earnings Whispers for ROST StockOur 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 before they are reported with our Earnings ESP Filter.Ross Stores currently has an Earnings ESP of +2.26% and a Zacks Rank of 3.Key Factors to Influence ROST’s Q4 ResultsRoss Stores’ quarterly performance is expected to have been bolstered by strong growth across its merchandise categories, driven by positive customer responses across both banners. The company’s ability to offer value-driven bargains continues to resonate with price-conscious consumers, particularly in an environment where discretionary spending remains cautious.Ross Stores is expected to benefit from its off-price retail model to attract value-focused shoppers. Additionally, its micro-merchandising strategy optimizes product allocation, ensuring inventory aligns with regional consumer preferences and supports margins. The company’s proven business model is likely to drive higher traffic, robust same-store sales growth and improved profitability.Consistent execution of store expansion plans is also expected to have supported top-line growth. These efforts have focused on expanding penetration in existing and new markets, with contributions from new stores anticipated to be reflected in the to-be-reported quarter’s results.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.On its last reported quarter’s earnings call, management emphasized that ROST’s core customer base, primarily low-to-moderate-income shoppers, has been burdened by high costs for necessities. These inflationary pressures have been limiting discretionary spending and reducing the demand for the company’s brands.As a result, Ross Stores expects total sales to drop 1-3% year over year in the fiscal fourth quarter. It forecasts an operating margin of 11.2-11.5%, down from the 12.4% recorded last year. This view reflects a soft merchandise margin as the company has been increasing the penetration of premium branded merchandise, somewhat offset by lower incentive and freight costs.Our model expects a year-over-year sales decline of 1.7% and a comps rise of 2.4% for the fiscal fourth quarter.ROST’s Stock Price Performance & Valuation PictureFrom 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 20.66x, which is below the five-year high of 79.52x and lower than the Retail-Discount Stores industry’s average of 32.53x.The recent market movements show that ROST’s shares have declined 10.4% in the past three months against the industry's 2.7% growth.ROST Stock Performance in the Past Three MonthsImage Source: Zacks Investment ResearchStocks With Favorable CombinationAbercrombie & Fitch ANF currently has an Earnings ESP of +0.59% and a Zacks Rank of 3. The company is likely to register growth in its top and bottom lines when it reports fourth-quarter fiscal 2024 results. The Zacks Consensus Estimate for quarterly revenues is pegged at $1.6 billion, which indicates an increase of 7.8% from the figure reported in the prior-year quarter.You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for ANF’s EPS is pegged at $3.49, suggesting an increase of 17.5% from the year-ago quarter’s reported figure. The consensus mark for earnings has moved down 0.6% in the past seven days. ANF has delivered a trailing four-quarter earnings surprise of 14.8%, on average.DICK'S Sporting Goods, Inc. DKS currently has an Earnings ESP of +0.98% and a Zacks Rank of 2. DKS is expected to have reported a decline in its top and bottom lines when it reports fourth-quarter fiscal 2024 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $3.75 billion, which indicates a 3.3% decrease from the figure reported in the year-ago quarter.The consensus estimate for DICK'S fiscal fourth-quarter earnings is pegged at $3.47 per share, down 9.9% from the year-ago quarter. The consensus mark for earnings has moved up 0.6% in the past 30 days. DKS has delivered a trailing four-quarter earnings surprise of 11.4%, on average.Ulta Beauty, Inc. ULTA has an Earnings ESP of +1.62% and a Zacks Rank of 2 at present. ULTA is likely to have registered a decline in its top and bottom lines when it reports fourth-quarter fiscal 2024 results. The Zacks Consensus Estimate for its quarterly revenues is pegged at $3.46 billion, which indicates a 2.6% decline from the figure reported in the year-ago quarter.The consensus estimate for Ulta Beauty’s fourth-quarter earnings is pegged at $7.06 per share, indicating a 12.6% decline from the figure reported in the year-ago quarter. The consensus mark for earnings has moved down by a penny in the past 30 days. ULTA has delivered an earnings beat of 6.2%, on average, in the trailing four quarters.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Abercrombie & Fitch Company (ANF): Free Stock Analysis Report Ross Stores, Inc. (ROST): Free Stock Analysis Report DICK'S Sporting Goods, Inc. (DKS): Free Stock Analysis Report Ulta Beauty Inc. (ULTA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks