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Factors to Note Before Ross Stores (ROST) Posts Q1 Earnings

Ross Stores, Inc. ROST is scheduled to release its first-quarter fiscal 2023 results on May 18. The off-price apparel and home accessories retailer is likely to have witnessed revenue and earnings growth in the to-be-reported quarter.

The Zacks Consensus Estimate for fiscal first-quarter revenues is pegged at $4.5 billion, indicating growth of 3.9% from the figure reported in the year-ago quarter. For fiscal first-quarter earnings, the consensus mark of $1.06 per share suggests growth of 9.3% from the year-ago quarter's reported number. The consensus mark for earnings has been unchanged over the past 30 days.

We expect the company’s fiscal first-quarter total revenues to increase 3% year over year to $4,464.6 million and earnings to rise 6.4% to $1.03 per share.

In the last reported quarter, Ross Stores delivered an earnings surprise of 6.5%. In the trailing four quarters, it delivered an earnings beat of 10.3%, on average.

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 benefiting from robust customer demand and improved traffic trends in the retail industry. Sales in the fiscal first 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. Gains at the core business, driven by consumers' continued focus on value and the company’s ability to deliver value bargains to customers, bode well.

Ross Stores has been consistent with the execution of its store expansion plans, which are likely to have aided the top line. The company's store-expansion efforts have been focused on continually increasing penetration in existing and new markets. The first-quarter fiscal 2023 performance is anticipated to have gained from the company’s return to normal store opening targets. Gains from new stores are expected to get reflected in ROST’s sales for the fiscal first quarter.

On its last reported quarter’s earnings call, Ross Stores was optimistic about its first-quarter fiscal 2023 performance. The company expects sales growth of 1-4% year over year in the fiscal first quarter. Earnings per share are envisioned between 99 cents and $1.05 for the fiscal first quarter.

However, Ross Stores has been witnessing the effects of the ongoing financial pressures on dd’s DISCOUNTS’ lower-income customer base and increased markdowns. On the last reported quarter's earnings call, the company anticipated the escalating inflationary pressures that are affecting dd's lower-income customer base and increased promotions to hurt its comps in the to-be-reported quarter.

On its last reported quarter’s earnings call, Ross Stores noted that its comp performance in the first quarter of fiscal 2023 will reflect the continued impacts of elevated inflation on its low-to-moderate income customers. For first-quarter fiscal 2023, the company expects comps to be relatively flat on a 52 weeks basis, whereas it reported 7% comps growth in the prior-year quarter.

Further, Ross Stores’ cost of goods sold is likely to have witnessed continued impacts of lower merchandise margins, unfavorable timing of pack-away-related costs and increased markdowns. Unfavorable timing of pack-away-related expenses and deleverage from its new distribution center are expected to have resulted in higher distribution costs.

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 an Earnings ESP of 0.00% and a Zacks Rank #2.

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:

American Eagle Outfitters AEO currently has an Earnings ESP of +7.46% and a Zacks Rank of 3. The company is likely to register top and bottom-line growth when it reports first-quarter fiscal 2023 results. The consensus mark for AEO’s quarterly revenues is pegged at $1.06 billion, which suggests growth of 0.9% 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 American Eagle’s earnings has moved up by a penny to 17 cents per share in the past seven days. The consensus estimate indicates 6.3% growth from the year-ago quarter’s reported figure.

Urban Outfitters URBN currently has an Earnings ESP of +2.27% and a Zacks Rank #3. The company is likely to register growth in the top and bottom lines when it reports first-quarter fiscal 2023 numbers. The consensus mark for URBN’s quarterly earnings has moved up by a penny to 37 cents per share in the past seven days. The consensus estimate suggests a 12.1% increase from the year-ago quarter’s reported number.

The Zacks Consensus Estimate for Urban Outfitters’ quarterly revenues is pegged at $1.09 billion, which suggests growth of 3.9% from the figure reported in the prior-year quarter.

DICK'S Sporting Goods DKS currently has an Earnings ESP of +3.39% and a Zacks Rank #3. The company is likely to register growth in the top and bottom lines when it reports first-quarter fiscal 2023 results. The consensus mark for DKS’ quarterly revenues is pegged at $2.83 billion, which suggests 4.7% growth from the figure reported in the prior-year quarter.

The consensus mark for DKS’ quarterly earnings has been unchanged over the past 30 days at $3.18 per share. The consensus estimate suggests growth of 11.6% from the year-ago quarter.

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

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