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Can Ross Stores (ROST) Beat Q4 Earnings Amid Cost Headwinds?

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Ross Stores, Inc. ROST is scheduled to release fourth-quarter fiscal 2021 results on Mar 1. The off-price retailer of apparel and home accessories is likely to have witnessed revenue growth in the to-be-reported quarter.

The Zacks Consensus Estimate for fiscal fourth-quarter revenues is pegged at $5.04 billion, indicating growth of 18.5% from the figure reported in the year-ago quarter. The consensus mark for fiscal 2021 revenues is pinned at $18.9 billion, indicating growth of 51% from the prior-year reported figure.

For fiscal fourth-quarter earnings, the consensus mark of 97 cents per share suggests growth of 44.8% from the year-ago quarter's reported number. The consensus mark has been unchanged in the past 30 days. The consensus estimate for fiscal 2021 earnings is pegged at $4.80 per share, indicating growth of 515.4% from the prior-year reported figure.

In the last reported quarter, Ross Stores delivered an earnings surprise of 37.97%. It has delivered an earnings beat of 22.7%, on average, in the trailing four quarters.

Ross Stores, Inc. Price and EPS Surprise

Ross Stores, Inc. Price and EPS Surprise
Ross Stores, Inc. Price and EPS Surprise

Ross Stores, Inc. price-eps-surprise | Ross Stores, Inc. Quote

Key Factors to Note

Ross Stores has been witnessing robust customer demand, aiding the top line. Sales in the fiscal fourth quarter are likely to have benefited from broad-based growth across merchandise categories and regions, as well as robust comparable store sales. Sales are also expected to have gained from robust trends at the dd's DISCOUNTS business.

On its last reported quarter’s earnings call, Ross Stores noted that the ongoing strength in consumer demand is likely to continue despite the uncertainty regarding supply-chain woes. It expected to gain market share due to the increased retail closures and bankruptcies in recent months. Ross Stores expected comps to increase 7-9% for the fourth quarter of fiscal 2021, while the overall sales are expected to grow 10-13%. Earnings per share are envisioned to be 83-93 cents for the fiscal fourth quarter.

ROST also updated its guidance for fiscal 2021. It anticipated comps to increase 12-13%. Ross Stores expected earnings per share of $4.65-$4.75 per share for fiscal 2021, whereas it reported earnings of $4.60 in fiscal 2019.

Ross Stores has been consistent with the execution of its store expansion plans, which is likely to have aided the top line. The company's store-expansion efforts are focused on continually increasing penetration in the existing as well as new markets. Ross Stores completed its expansion program for fiscal 2021 by introducing 18 Ross and 10 dd's DISCOUNTS stores in the fiscal fourth quarter. Gains from the new stores are expected to get reflected in the company's sales for the fiscal fourth quarter.

However, Ross Stores has been witnessing the effects of the worsening of the industry-wide supply-chain congestion, which has been leading to higher freight costs and distribution expenses. This is likely to have partly impacted the company’s cost of goods sold (COGS) rate in the fiscal fourth quarter.

On the last reported quarter's earnings call, Ross Stores anticipated greater uncertainty about the worsening of industry-wide supply-chain congestion as the company entered the holiday season. The company’s guidance for the fiscal fourth quarter includes impacts of the ongoing freight pressure related to the supply-chain congestion. Management stated that freight cost headwinds are not likely to subside at least through the first half of fiscal 2022.

Zacks Model

Our proven model does not conclusively predict an earnings beat for Ross Stores this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Ross Stores has a Zacks Rank #4 (Sell) and an Earnings ESP of +3.49%.

Stocks With Favorable Combination

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

Dollar Tree DLTR currently has an Earnings ESP of +3.05% and a Zacks Rank of 2. The company is expected to register a top-line increase when it reports fourth-quarter fiscal 2021 numbers. The Zacks Consensus Estimate for quarterly revenues is pegged at $7.13 billion, which suggests a rise of 5.3% from the figure reported in the prior-year quarter. You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Dollar Tree's quarterly earnings has moved up by a penny in the last seven days to $1.79 per share, suggesting a 15.7% decline from the year-ago quarter's reported number. DLTR has delivered an earnings beat of 8.8%, on average, in the trailing four quarters.

DICK'S Sporting DKS currently has an Earnings ESP of +4.86% and a Zacks Rank of 2. It is likely to register top and bottom-line growth when it reports fourth-quarter fiscal 2021 numbers. The Zacks Consensus Estimate for quarterly earnings has moved up by a penny in the last seven days to $3.39 per share, suggesting 39.5% growth from the year-ago quarter's reported number.

The Zacks Consensus Estimate for DICK’S Sporting’s quarterly revenues is pegged at $3.31 billion, suggesting growth of 6% from the figure reported in the prior-year quarter. DKS has delivered an earnings beat of 104.2%, on average, in the trailing four quarters.

Nordstrom JWN currently has an Earnings ESP of +0.38% and a Zacks Rank #3. It is likely to register top and bottom-line growth when it reports fourth-quarter fiscal 2021 numbers. The Zacks Consensus Estimate for its quarterly earnings moved down by a penny in the last seven days to $1.04 per share, suggesting growth of 395.2% from the year-ago quarter’s reported number.

The Zacks Consensus Estimate for Nordstrom's quarterly revenues is pegged at $4.4 billion, which suggests growth of 21% from the figure reported in the prior-year quarter. JWN has delivered an earnings beat of 24.7%, on average, in the trailing four quarters.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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Ross Stores, Inc. (ROST) : Free Stock Analysis Report

DICK'S Sporting Goods, Inc. (DKS) : Free Stock Analysis Report

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