It seems like when there is some overhanging fear over a sector, like fear of dividend suspensions, it allows the shorts to get the upper hand and the longs to be skittish, resulting in directional moves based upon the underlying commodities, but the moves are very exaggerated relatively speaking.
That means that when / if the overhanging fear is found to be baseless or it passes, the bounce back move will be huge. The question is when?
Yeah it's amazing isn't it? Some stocks don't have to make a profit as long as they are growing their subscribers or sales, like AMZN and NFLX. I hate it too but I guess the market can remain stupid for far longer than we would imagine. Could they still be growing like they are if they priced their products so that they make a profit? I doubt it.
They do sandbag alright. Their guidance for Q1 EPS was $1.21 - $1.26 and they came in with $1.37 or $1.33 if you subtract the one time benefit of $0.04. So that's +7.7% better than what the midpoint of their own guidance was!
By the way, the consensus estimate for comparable store sales was +3.4% and ROST came in with +5% vs their own guidance of 2% - 3%, considerably better (2x at the midpoint).
Yeah this should pop but even if the market decides to be obtuse in the short term, I'm in it for the long haul anyway.
Actually now that I think about it, it isn't so shocking that cnbc avoids ROST since Dana Telsey got her analysis on ROST bass ackwards wrong a while back and now since she is a friend of the show they cannot talk about ROST. Fair and balanced wall street analysis......NOT!
It shocks me the way cnbc is so obsessed with TJX and GPS and APO and M and JCP and..........., and rarely if ever mentions ROST............on second thought maybe that's a good thing........
Nice call. Well she probably is sandbagging as usual but she increased the FY EPS guidance by about 2% at the midpoint and tightened the range a bit.
Even adjusting for the 0.04, 1.33 still beats consensus of 1.28 and the way the stock has been trading lately, that beat was definitely not baked in as there has been a lot of negativity regarding retail stocks as proven by the way the pop it got on the TJX results was rapidly taken away.
Looks like the unfavorable foreign currency rates are putting a hurt on their guidance. Won't be an issue for ROST though:
Full Year and First Quarter Fiscal 2016 Outlook
For the fiscal year ending January 30, 2016, the Company expects diluted earnings per share to be in the range of $3.17 to $3.25 versus $3.15 in Fiscal 2015. Excluding the $.01 debt extinguishment charge in Fiscal 2015 referred to above, this guidance would represent a 0% to 3% increase over the adjusted $3.16 in Fiscal 2015. This guidance reflects an assumption that currency could have a 5% negative impact on EPS growth, including 3% due to the impact of the dramatic change in foreign currency exchange rates on translation and mark-to-market adjustments (described above) and 2% from the effect of currency on merchandise margins at the Company’s international divisions. The Company is also assuming that the combination of its investments in Associates, incremental investments to support its growth, and pension costs will negatively impact EPS growth by an additional 4%. This EPS outlook is based upon estimated consolidated comparable store sales growth of 1% to 2%, consistent with the Company’s plans in prior years. Again, the Company is reiterating its 10% to 13% long-term annual EPS growth model.
For the first quarter of Fiscal 2016, the Company expects diluted earnings per share to be in the range of $.64 to $.66, which would represent a 0% to 3% increase over last year’s $.64 per share. This guidance reflects an assumption that currency could have a 4% negative impact on EPS growth, including 3% due to the impact of the dramatic change in foreign currency exchange rates on translation and mark-to-market adjustments (described above) and 1% from the effect of currency on merchandise margins at the Company’s international divisions. The Company also expects the combination of incremental investments to support its growth, employee payroll and pension costs to negatively impact EPS growth
When will you raise your price target from $72 ??? LOL
Well I guess I would just counter that with the comment that I hope you are not saying that the only hope for ROST to gain $ market share in the overall apparel industry in the USA is to take customers from TJX.
Directly, indirectly..........doesn't really matter much to me as a shareholder. I think you were on the right track previously when you were stressing the importance of average wage growth (or lack thereof).
of which 1,146 were Ross locations in 33 states, the District of Columbia and Guam.
Yeah I think they compete to some extent, sure. They both are in the apparel business, although Ross doesn't compete overseas or in online sales. When people decide they need to save money but that "hmmm I guess I still need clothing", they might tend to defect to off price discount stores.
When you are doing a valuation study it is common practice to compare to other companies in the same industry, of similar market caps.
The Gap, Inc. (Gap Inc.),is a global specialty apparel company. Gap Inc. offers apparel, accessories, and personal care products for men, women, children, and babies under the Gap, Old Navy, Banana Republic, Piperlime, and Athleta brands. The Company operates in two segments: Stores, which includes the operations of the retail stores for Gap, Old Navy, and Banana Republic, and Direct, which includes the operations for its online brands, both domestic and international. It has Company-operated stores in the United States, Canada, the United Kingdom, France, Ireland, Japan, China, and Italy. It also has franchise agreements with unaffiliated franchisees to operate Gap and Banana Republic stores. Under these agreements, third parties operate or will operate stores that sell apparel and related products under its brand names. In February 2014, GAP Inc announced the Old Navy's opening of the brand's first store in China.
Ross Stores, Inc. is an off-price apparel and home fashion chain in the United States. The Company operates two brands of off-price retail apparel and home fashion stores: Ross Dress for Less (Ross) and dd’s DISCOUNTS. Ross offers designer apparel, accessories, footwear, and home fashions for the entire family at everyday savings of 20% to 60% off department and specialty store regular prices. Its merchandise offerings also include, but are not limited to, small furniture and furniture accents, educational toys and games, luggage, gourmet food and cookware, watches, and sporting goods. As of February 1, 2014, it operated 130 dd’s DISCOUNTS stores in 10 states that features brand apparel, accessories, footwear, and home fashions for the entire family at everyday savings of 20% to 70% off moderate department and discount store regular prices. At February 1, 2014, it operated a total of 1,276 stores, of which 1,146 were Ro
keep saying all day that Morgan Stanley trimmed their position by 1%. The truth is they trimmed their portfolio weighting on AAPL from 4% to 3% and that is a 25% trimming of their total position. CNBC reporters can't even do math at the remedial level. They also advised their clients to do the same.
PS: I know that it is a 1percentage point trimming but what really matters is what percentage of their position they sold.
And the market obviously agrees with you judging by the nice pops in LUX, JWN, LB, ROST, GPS, KSS, M, TJX, etc. All were up around 2% today.
By the way, since ROST is actually in the index Nasdaq Global Select, an argument could be made that it is better to compare its performance to that index rather then the S&P500 like I did previously. That would mean that ROST is still underperforming its own index even at it's intraday high today since 10/8/13 (+13 mos trailing): NQGS +30.6%, ROST +28.6%, S&P500 +25.3%.
That means there could be some more upside even after the pop today. According to Thomson Reuters stock report on 11/27, 21 analysts have a mean price target of $91, high of $101 and some clown analyst way out on a limb at a low of $73 (LOL).
I just looked at the combined industries of Apparel and Dept Stores and reduced it to the 8 large caps (market cap $10B), which is the symbols: LUX, JWN, LB, ROST, GPS, KSS, M, TJX. I did this so as to not be comparing apples with oranges. Within this group, the unweighted avgs for P/E, Forward P/E, and PEG are: 20.84, 17.54, 1.94. The market cap weighted avgs are: 21.72, 18.08, 1.96. ROST (mcap $18.74B) P/E of 21.67 vs 21.72, Forward P/E of 18.88 vs 18.08, and PEG of 1.87 vs 1.96 does NOT support a thesis of the stock being overvalued, in fact quite the contrary.
A few negative nellies like someone on seeking alpha (probably the Canaccord Genuity analyst in desperation) are talking a lot about the big run up that ROST has made recently, but they fail to point out that the stock is only pretty much trading in line with the S&P500 on a trailing 14 mos. basis, which is a reasonable starting point since it nullifies the slight run up relative to the market that it made in the 2 mos. prior to the Q3 '13 earnings release. In other words, the recent run up in the stock is simply a correction, and the market is not being stupid or overly exuberant.
PS: The Russell 2000 is looking like it may want to make a run for it and if it does that could very well bode well for the overall market in the near term. Small caps generally lead the market up or down.
jack - check out the recent seekingalpha article "A Few Reasons Why Ross Stores Can Get Better After Third Quarter Earnings". The author makes some good points. Forward P/E is reasonable at 18.9 and falls below industry average. I think they are sandbagging for Q4 and in the CC they fell just short of admitting they were. Weak wage growth is a plus for an off price apparel store because more and more people will be joining the ranks of discount seekers and apparel is more of a necessity than a luxury. Ross Stores is doing it better than the competition like Kohls and they are expanding into new regions. Their management knows how to handle the analysts in a CC too and they won't give them any information that is subject to twisting to make look bad. They know the analysts are not their friends and I like that.
They are expanding into new regions (+6% store count in Q3) and are taking market share. Just look at the Gap dissapointing same store sales and Revenue and guidance reduction.
Sales are accelerating :
Q1 '14: +5.5% y/y
Q2 '14: +7.1% y/y
Q3 '14: +8.8% y/y
This was not done at the expense of Operating Margin, since this increased by 55 basis points or +4.9% y/y in Q3.