How Did Ross Stores’ Stock React to Fiscal 1Q16 Earnings?
Ross Stores Updates Guidance after Fiscal 1Q16 Earnings
Fiscal 1Q16 results affect stock price
On May 20, Ross Stores’ (ROST) stock fell 5.5% to $52.49, as the company missed analysts’ sales estimates for fiscal 1Q16 and issued lower-than-expected guidance. Ross Stores announced its results for fiscal 1Q16, which ended April 30, 2016, after the Market closed on May 19. With the drop on May 20, Ross Stores’ stock has fallen by 3.5% on a YTD (year-to-date) basis.
As of May 20, the stock prices of off-price retailers TJX Companies (TJX) and Burlington Stores (BURL) have risen by 6.5% and 25.1%, respectively, on a YTD basis. The stock price of high-end department store Nordstrom (JWN), which has a presence in the off-price space through its Rack stores, has fallen by 24% YTD.
Earnings in line with estimates
Ross Stores reported fiscal 1Q16 adjusted EPS (earnings per share) of $0.73, which was in line with analysts’ consensus earnings estimate. Ross Stores’ adjusted EPS rose by 6.6% from the first quarter of the previous fiscal year. This growth was primarily driven by higher sales. On an adjusted basis, Ross Stores’ earnings growth in 1Q16 was lower than the growth rates of 10% in fiscal 4Q15 and 19.1% in fiscal 1Q15. The PowerShares Dynamic Large Cap Growth Portfolio (PWB) has 1.3% exposure to Ross Stores.
Off-price retailer TJX Companies reported earnings growth of 10.1% in the comparable first quarter.
Guidance revised
Ross Stores now expects its fiscal 2016 diluted EPS to be in the range of $2.63–$2.72. This range is higher than the diluted EPS of $2.51 in fiscal 2015. The company’s previous guidance, issued in February 2016, forecast fiscal 2016 diluted EPS would be in the range of $2.59–$2.71.
Ross Stores expects its fiscal 2Q16 EPS to be in the range of $0.64–$0.67 compared to $0.63 in fiscal 2Q15. The company’s fiscal 2Q16 EPS guidance fell short of analysts’ expectations of $0.70.
Read the next part of this series for a discussion of the company’s sales performance in fiscal 1Q16.
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