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Ross Stores (ROST) to Report Q1 Earnings: Is a Beat in Store?

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Ross Stores, Inc. ROST is scheduled to release first-quarter fiscal 2021 results on May 20. The off-price retailer of apparel and home accessories is likely to have witnessed revenue and earnings growth in the to-be-reported quarter.

The Zacks Consensus Estimate for fiscal first-quarter earnings of 87 cents per share suggests substantial growth from a loss per share of 29 cents reported in the year-ago quarter. Moreover, the consensus mark moved up by a penny in the past seven days. The consensus mark for revenues is pegged at $3.84 billion, indicating growth of 108.3% from the figure reported in the year-ago quarter.

In the last reported quarter, the company delivered a negative earnings surprise of 35%. Moreover, it delivered a negative earnings surprise of 678.8%, on average, in the trailing four quarters.

Factors to Note

Ross Stores has been impacted by soft store traffic due to the rise in coronavirus cases as well as elevated costs in the past few 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

On the last reported quarter’s earnings call, management notified that results throughout fiscal 2021 will be reported in comparison to fiscal 2019, as the headwinds caused by the pandemic throughout fiscal 2020 make fiscal 2019 a more appropriate basis of comparison.

Hence, it provided first-quarter fiscal 2021 guidance in comparison with fiscal 2019. It expects sales to be down 1% to up 4% for the first quarter of fiscal 2021 compared with the three months ended May 4, 2019. Moreover, comps are expected to be down 1% to up 5% for the first quarter of fiscal 2021. Sales expectations were based on a potentially muted demand during Easter and the impacts of the ongoing supply-chain disruptions.

Moreover, the company predicted earnings per share of 74-86 cents for the fiscal first quarter. Notably, it reported a loss per share of 29 cents in the first quarter of fiscal 2020, while it recorded earnings of $1.13 per share in first-quarter fiscal 2019. Operating margin for the quarter under review is expected to be 9.9-10.8%, whereas it reported 14.1% in the first quarter of fiscal 2019. This includes the estimated decline in comps and COVID-led costs related to higher supply-chain costs and elevated wages.

Notably, the company is expected to have witnessed an improvement in earnings and sales from that reported in first-quarter fiscal 2020. The favorable year-over-year comparison is expected to have mainly stemmed from the pandemic-led extensive store closures and lockdowns imposed in March 2020.

The company is likely to have gained from improving movements due to the vaccination drives and the rise in demand for social as well as casual clothing. Moreover, its results for the fiscal first quarter are expected to reflect gains from the stimulus packages distributed in March, which has resulted in increased consumer spending.

Zacks Model

Our proven model conclusively predicts 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. 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 #3 and an Earnings ESP of +6.25%.

Other Stocks With Favorable Combination

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

L Brands, Inc. LB has an Earnings ESP of +2.64% and it currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Target Corporation TGT has an Earnings ESP of +20.84% and a Zacks Rank #2 at present.

The TJX Companies, Inc. TJX currently has an Earnings ESP of +7.63% and a Zacks Rank #3.

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