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Ross Stores Rises on 3rd-Quarter Earnings Beat

Shares of Ross Stores Inc. (NASDAQ:ROST) rose 1.08% to $113 price per unit in extended trading on Thursday after the California-based retail company issued third-quarter results.

Earnings per share of $1.03 increased 13.2% year over year and beat consensus estimates by 6 cents.

Revenue of $3.85 billion grew 8.5% from the year-ago quarter and topped projections by $80 million.

The discount retail company recorded a 5% gain in total comparable sales, exceeding the 3% gain recorded in the prior-year quarter.

In a statment, CEO Barbara Rentler commented on Ross' performance.

"As we enter this year's holiday season, we are up against multiple years of strong comparable store sales gains. In addition, we expect another fiercely competitive retail landscape, along with ongoing uncertainty surrounding the macro-economic and political environment. As such, while we hope to do better, we continue to project fourth quarter comparable store sales gains of 1% to 2% versus a 4% increase last year."

Moreover, the operating income margin of 12.42% of total net sales was up about 0.5 basis points year over year.

Looking ahead, Ross Stores estimates earnings per share of $1.20 to $1.25 for the final quarter of fiscal 2019, which includes a one-time profit of 2 cents as a result of the positive settlement of a tax issue. The company also targets earnings per share of $4.52 to $4.57 for full-year 2019, up from $4.26 in 2018 and above estimates of $4.51.

The stock was trading around $111.79 per share at close on Thursday for a market capitalization of $40.44 billion. Year to date, the share price has risen 34% and is now above the 120-, 70- and 50-day simple moving average lines.

The 52-week range is $75.91 to $114.83.

Wall Street issued an overweight recommendation rating for shares of Ross Stores with an average target price of $114.57.

On the dividend front, on Dec. 31, the retailer will pay 25.5 cents per common share to its shareholders of record as of Dec. 6. The ex-dividend date is scheduled for Dec. 5. The payment produces a 0.92% forward dividend yield and an 0.89% trailing 12-month dividend yield as of Nov. 21.

Additionally, Ross Stores returned cash to its shareholders through the enactment of a share repurchase program during the third quarter, retiring 3 million shares of its own stock for total spending of $326 million. The company said it is on track to repurchase $1.275 billion worth of stock for the full year.

Disclosure: I have no positions in any securities mentioned.

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This article first appeared on GuruFocus.