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Ross Stores (ROST) to Report Q3 Earnings: Is a Beat Likely?
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Ross Stores, Inc. (ROST - Free Report) is scheduled to release third-quarter fiscal 2021 results on Nov 18. 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 third-quarter revenues is pegged at $4.35 billion, indicating growth of 15.8% from the figure reported in the year-ago quarter. The consensus mark for earnings of 77 cents per share suggests a decline of 24.5% from the year-ago quarter's reported number. The consensus mark has moved up by a penny in the past 30 days.
In the last reported quarter, Ross Stores delivered an earnings surprise of 39%. It has delivered an earnings beat of 28.7%, on average, in the trailing four quarters.
Ross Stores has been witnessing accelerated demand trends after the easing of the COVID-led restrictions, which has been aiding its sales. The momentum from strong customer demand and accelerated vaccinations are likely to have aided the performance in the fiscal third quarter. Higher average basket size, with a slight increase in traffic trends, is expected to have aided comparable store sales in the third quarter.
However, on the last reported quarter's earnings call, Ross Stores provided a cautious view for the fiscal third quarter. Third quarter results are expected to be impacted by uncertainty regarding the sustainability of the external factors aiding results and the risk of COVID-related headwinds due to spread of variants and supply-chain congestion. The company noted that the spread of the delta variant in some regions might result in consumers refraining from visiting stores. It also expected the benefits of the pandemic-related stimulus packages witnessed in the first half to fade relatively in the second half. The company's guidance reflects comparisons from the fiscal 2019 period.
Ross Stores predicted earnings per share of 61-69 cents for third-quarter fiscal 2021, whereas it reported $1.03 in third-quarter fiscal 2019. Sales are anticipated to grow 9-12%, with comps expected to increase 5-7% from that reported in third-quarter fiscal 2019.
The company anticipated the wage increases to result in higher SG&A expenses, hurting margins in the fiscal third quarter. It expects an operating margin of 7.3-7.9%. The guidance considers expectations of a higher cost of goods sold due to a significant rise in freight costs and distribution expenses. Higher COVID-related costs are also predicted to hurt EBIT margins. It anticipates COVID-related costs to affect EBIT margins by 45 bps in third-quarter fiscal 2021. The rise in costs and soft margins despite robust sales are likely to have impacted earnings in the to-be-reported quarter.
Nonetheless, 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. Management anticipates opening 28 stores in third-quarter fiscal 2021, including 18 Ross Dress for Less and 10 dd's DISCOUNTS stores. Gains from the new stores are expected to get reflected in the company's sales for the fiscal third quarter.
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 +7.92%.
Other Retailers Likely to Post a Beat Next Week
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:
Home Depot (HD - Free Report) currently has an Earnings ESP of +4.59% and a Zacks Rank of 2. The company is expected to register a bottom-line increase when it reports third-quarter fiscal 2021 numbers. The Zacks Consensus Estimate for quarterly earnings has moved up 1.8% in the last seven days to $3.38 per share, suggesting 6.3% growth from the year-ago quarter's reported number. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Home Depot's quarterly revenues is pegged at $34.5 billion, which suggests a rise of 3% from the figure reported in the prior-year quarter. HD has delivered an earnings beat of 9.2%, on average, in the trailing four quarters.
Lowe's Companies (LOW - Free Report) currently has an Earnings ESP of +14.12% and a Zacks Rank of 2. It is likely to register a bottom-line increase when it reports third-quarter fiscal 2021 numbers. The Zacks Consensus Estimate for quarterly earnings has moved up 1.3% in the last seven days to $2.30 per share, suggesting 16.2% growth from the year-ago quarter's reported number.
The Zacks Consensus Estimate for Lowe's quarterly revenues is pegged at $21.7 billion, suggesting a decline of 2.8% from the figure reported in the prior-year quarter. LOW has delivered an earnings beat of 10.2%, on average, in the trailing four quarters.
Macy's (M - Free Report) currently has an Earnings ESP of +22.87% and a Zacks Rank #2. It is likely to register top and bottom-line growth when it reports third-quarter fiscal 2021 numbers. The Zacks Consensus Estimate for its quarterly earnings moved up by a penny in the last seven days to 27 cents per share, suggesting substantial growth from a loss per share of 19 cents reported the year-ago quarter.
The Zacks Consensus Estimate for Macy's quarterly revenues is pegged at $5.2 billion, which suggests growth of 29.6% from the figure reported in the prior-year quarter. M has delivered an earnings beat of 269.8%, on average, in the trailing four quarters.
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Ross Stores (ROST) to Report Q3 Earnings: Is a Beat Likely?
Ross Stores, Inc. (ROST - Free Report) is scheduled to release third-quarter fiscal 2021 results on Nov 18. 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 third-quarter revenues is pegged at $4.35 billion, indicating growth of 15.8% from the figure reported in the year-ago quarter. The consensus mark for earnings of 77 cents per share suggests a decline of 24.5% from the year-ago quarter's reported number. The consensus mark has moved up by a penny in the past 30 days.
In the last reported quarter, Ross Stores delivered an earnings surprise of 39%. It has delivered an earnings beat of 28.7%, on average, in the trailing four quarters.
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 accelerated demand trends after the easing of the COVID-led restrictions, which has been aiding its sales. The momentum from strong customer demand and accelerated vaccinations are likely to have aided the performance in the fiscal third quarter. Higher average basket size, with a slight increase in traffic trends, is expected to have aided comparable store sales in the third quarter.
However, on the last reported quarter's earnings call, Ross Stores provided a cautious view for the fiscal third quarter. Third quarter results are expected to be impacted by uncertainty regarding the sustainability of the external factors aiding results and the risk of COVID-related headwinds due to spread of variants and supply-chain congestion. The company noted that the spread of the delta variant in some regions might result in consumers refraining from visiting stores. It also expected the benefits of the pandemic-related stimulus packages witnessed in the first half to fade relatively in the second half. The company's guidance reflects comparisons from the fiscal 2019 period.
Ross Stores predicted earnings per share of 61-69 cents for third-quarter fiscal 2021, whereas it reported $1.03 in third-quarter fiscal 2019. Sales are anticipated to grow 9-12%, with comps expected to increase 5-7% from that reported in third-quarter fiscal 2019.
The company anticipated the wage increases to result in higher SG&A expenses, hurting margins in the fiscal third quarter. It expects an operating margin of 7.3-7.9%. The guidance considers expectations of a higher cost of goods sold due to a significant rise in freight costs and distribution expenses. Higher COVID-related costs are also predicted to hurt EBIT margins. It anticipates COVID-related costs to affect EBIT margins by 45 bps in third-quarter fiscal 2021. The rise in costs and soft margins despite robust sales are likely to have impacted earnings in the to-be-reported quarter.
Nonetheless, 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. Management anticipates opening 28 stores in third-quarter fiscal 2021, including 18 Ross Dress for Less and 10 dd's DISCOUNTS stores. Gains from the new stores are expected to get reflected in the company's sales for the fiscal third quarter.
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 +7.92%.
Other Retailers Likely to Post a Beat Next Week
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:
Home Depot (HD - Free Report) currently has an Earnings ESP of +4.59% and a Zacks Rank of 2. The company is expected to register a bottom-line increase when it reports third-quarter fiscal 2021 numbers. The Zacks Consensus Estimate for quarterly earnings has moved up 1.8% in the last seven days to $3.38 per share, suggesting 6.3% growth from the year-ago quarter's reported number. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Home Depot's quarterly revenues is pegged at $34.5 billion, which suggests a rise of 3% from the figure reported in the prior-year quarter. HD has delivered an earnings beat of 9.2%, on average, in the trailing four quarters.
Lowe's Companies (LOW - Free Report) currently has an Earnings ESP of +14.12% and a Zacks Rank of 2. It is likely to register a bottom-line increase when it reports third-quarter fiscal 2021 numbers. The Zacks Consensus Estimate for quarterly earnings has moved up 1.3% in the last seven days to $2.30 per share, suggesting 16.2% growth from the year-ago quarter's reported number.
The Zacks Consensus Estimate for Lowe's quarterly revenues is pegged at $21.7 billion, suggesting a decline of 2.8% from the figure reported in the prior-year quarter. LOW has delivered an earnings beat of 10.2%, on average, in the trailing four quarters.
Macy's (M - Free Report) currently has an Earnings ESP of +22.87% and a Zacks Rank #2. It is likely to register top and bottom-line growth when it reports third-quarter fiscal 2021 numbers. The Zacks Consensus Estimate for its quarterly earnings moved up by a penny in the last seven days to 27 cents per share, suggesting substantial growth from a loss per share of 19 cents reported the year-ago quarter.
The Zacks Consensus Estimate for Macy's quarterly revenues is pegged at $5.2 billion, which suggests growth of 29.6% from the figure reported in the prior-year quarter. M has delivered an earnings beat of 269.8%, on average, in the trailing four quarters.