Ross Stores ROST looks well poised for long-term growth on the back of positive customer response, improved merchandise and store expansion plans. This caused the shares of this Zacks Rank #3 (Hold) company to rise 6.6% in the past three months compared with the industry’s growth of 0.8%.
Also, an uptrend in the Zacks Consensus Estimate echoes the same positivity. The consensus mark for ROST’s fiscal 2023 earnings and sales indicates growth of 12.6% and 4.6%, respectively, from the previous year’s reported numbers.
The bottom-line estimate for the current financial year has increased 0.4% to $4.93 over the past 30 days. Ross Stores’ earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 11.5%.
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What’s Aiding ROST?
The company’s proven off-price model offers strong value proposition and micro-merchandising that drive better product allocation and margins. Overall, strength at the core business and the company’s ability to deliver competitive bargains make its stores an attractive destination for customers in all economic sectors.
ROST remains on track with its store expansion efforts in the existing as well as new markets. In fiscal first-quarter 2023, the company opened 19 stores, including 11 Ross and eight dd's DISCOUNTS stores. In fiscal 2023, it expects to open 100 stores, including 75 Ross and 25 dd’s DISCOUNTS.
Also, Ross Stores comfortably funds shareholder cash distributions at present, boasting a stable financial standing. The company recorded repurchase of 2.2 million shares of common stock for $234 million in its last earnings report. It is on track to repurchase the remaining shares worth $950 million under the existing plan in fiscal 2023.
In another development, ROST’s management approved dividends of 33.5 cents per share, payable Jun 30, 2023, to shareholders of record as of Jun 6, 2023.
The bottom line in fiscal 2023 is estimated to be in the range of $4.77-$4.99, indicating an improvement from the previous year’s reported figure of $4.38. This includes an estimated benefit of 15 cents from the 53rd week.
For fiscal second-quarter 2023, the bottom line is projected in the band of $1.07-$1.14. Total sales are expected to grow 1-4% year over year.
Wrapping Up
Although increased expenses related to incentive compensation and higher distribution costs remain near-term headwinds, ROST is likely to sustain momentum on the back of strong value offerings, store expansion efforts and improved merchandises. A VGM Score of A and long-term earnings growth rate of 10.5% raise optimism in the stock.
Stocks to Consider
Some better-ranked stocks in the industry are Abercrombie & Fitch ANF, Urban Outfitters URBN and Walmart WMT.
Abercrombie & Fitch, a specialty retailer of premium, high-quality casual apparel for men, women and kids, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for ANF’s 2024 earnings and sales indicates growth of 732% and 3.4%, respectively, from the previous year’s reported actuals. The company has a trailing four-quarter average earnings surprise of 480.6%.
Urban Outfitters, which engages in the retail and wholesale trading of general consumer products, currently sports a Zacks Rank #1. It has a long-term (three to five years) earnings growth rate of 18%.
The Zacks Consensus Estimate for Urban Outfitters’ fiscal 2023 earnings indicate an improvement of 57.1% from the year-ago reported number. URBN has a trailing four-quarter earnings surprise of 12.2%, on average.
Walmart, which operates a chain of hypermarkets, discount department stores and grocery stores, currently carries a Zacks Rank #2 (Buy). It has a long-term (three to five years) earnings growth rate of 5.5%.
The Zacks Consensus Estimate for Walmart’s fiscal 2023 sales indicate growth of 4.2% from the previous year’s reported actual. WMT has a trailing four-quarter average earnings surprise of 12%.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
