4 Factors that Make Ross Stores (ROST) a Promising Pick
Ross Stores, Inc. ROST appears to be an impressive pick, courtesy of its strategic growth endeavors, shareholder-friendly moves and positive estimate revisions. Concurrently, the company flaunts a Zacks Rank #2 (Buy). So, let’s take a closer look at the various parameters that have been driving Ross Stores, which also possesses a long-term earnings growth rate of 10.5%.
Robust Earnings History & Outlook
Ross Stores delivered positive earnings surprises in 11 out of the last 12 quarters. Notably, the company has outperformed the Zacks Consensus Estimate by an average of 5.8% in the trailing four quarters.
In fact, in the last reported first-quarter 2017, both the top and bottom line topped estimates and improved year over year despite facing a volatile macro environment. Results largely gained from dd's DISCOUNTS growth in same-store revenues and operating profits. Following the quarter, the company also raised its fiscal 2017 earnings view to a range of $3.07–$3.17 from $3.02–$3.15 guided earlier. Moreover, the latest guidance reflects an improvement from the year-ago earnings figure of $2.83. The raised outlook also led to an uptrend in estimates. These factors collectively underscore the company’s solid future potential.
Favorable Estimate Revisions
Following a sturdy performance and encouraging outlook, the Zacks Consensus Estimate for fiscal 2017 witnessed an uptrend as analysts raised their estimates. Analysts polled by Zacks are convinced about the stock’s upbeat performance in the future. Evidently, over the last 60 days, the Zacks Consensus Estimate for fiscal 2017 moved a notch higher to $3.15.
Ross Stores, Inc. Price and Consensus
Ross Stores, Inc. Price and Consensus | Ross Stores, Inc. Quote
Splendid Growth Strategies
Ross Stores’ continued focus on enhancing merchandise through investments in workforce, processes and technology, remains a key strategy to keep itself on the growth trajectory. The company continually fine-tunes and upgrades its systems and processes to enhance productivity, and is particularly committed to improving its assortments in the ladies’ apparel business. We also applaud Ross Store’s ability to run the business with leaner inventory levels and faster inventory turnover. The company remains focused on cutting down inventories at stores to the optimum level as well as making the right assortments available at the right store at the right time. This is likely to help the company to continue boosting its margins. All these endeavors, combined with Ross Stores’ robust store expansion program hint at superb ongoing prospects for the company, which flaunts a VGM Style Score of “A.”
Shareholder-Friendly Moves
Ross Stores’ commitment toward enhancing shareholders value is evident from its dividend payment history and share repurchase programs. In first-quarter fiscal 2017, the company bought back 3.3 million shares for $215 million. Further, it remains on track to repurchase $875 million worth shares through fiscal 2017 under its two-year $1.75 billion share repurchase program approved in Feb 2017. The company also paid dividends worth $62 million during the quarter. Other than its focus on shareholders, these moves also underscore the company’s financial flexibility.
However, Ross Stores remains prone to macroeconomic uncertainty and a volatile retail landscape. While these obstacles caused the company to witness a 6.1% drop in the last one year, it fares better than the Zacks categorized Retail – Discount Stores industry’s slump of 16.1%.
Nonetheless, we believe that this California – based company is moving in the right direction and is likely to sustain its overall performance in future.
Looking for More? Check These Hot Retail Stocks
A few other top-ranked stocks in the same sector are Big Lots, Inc. BIG, Burlington Stores, Inc. BURL and Dollar General Corporation DG.
Big Lots, with a long-term EPS growth rate of 13.5% and a spectacular earnings surprise history, carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Burlington, also holding a Zacks Rank #2, has a long-term EPS growth rate of 15.9%. The stock also has a sturdy earnings surprise history.
Dollar General has a long-term growth rate of 10.6%. Also, this Zacks Rank #2 stock delivered back-to-back positive earnings surprises in the last two quarters.
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