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Ross Stores Surges 25% in 3 Months: What's Aiding the Stock?

Ross Stores Inc. ROST is among the few stocks in the Retail sector that have been displaying immense growth potential. The company is gaining from its commitment toward better price management, merchandise, cost containment and store expansion plan. These factors have aided the company in delivering upbeat performance in the past several quarters.

Not only this, the company is benefiting from the favorable response of value-focused customers to its extensive collection of brand bargains and solid cost controls. This led the stock attain the Zacks Rank #2 (Buy), with a VGM Score of B. The company also possesses a long-term EPS growth rate of 10%.

Splendid Stock Performance

Ross Stores has gained nearly 10.3% since reporting strong third-quarter fiscal 2017 results on Nov 21. Moreover, the stock has surged 25% in the past three months, outperforming the industry’s 13.1% growth. The momentum in the stock price can largely be attributed to solid earnings trend as well as growth initiatives.



Solid Earnings Trend & Outlook

Ross Stores has a solid track record of delivering positive earnings surprises in 13 of the last 14 quarters. Notably, the company’s average positive surprise in the trailing four quarters is pegged at 5.5%. The company continued with its upbeat performance in the third quarter of fiscal 2017, wherein both the top and bottom lines topped estimates and improved year over year. Further, earnings came ahead of management's projection despite tough year-over-year comparisons, volatile retail environment and the impact of two major hurricanes during the quarter.

Ross Stores, Inc. Price, Consensus and EPS Surprise

Ross Stores, Inc. Price, Consensus and EPS Surprise | Ross Stores, Inc. Quote

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Driven by the continuation of trends witnessed in the third quarter, the company raised sales view for the fourth quarter. Further, a sturdy year-to-date performance and robust fiscal fourth-quarter projections encouraged management to hike earnings view for fiscal 2017.

Uptrend in Estimates

Backed by the company’s raised fiscal 2017 view, the Zacks Consensus Estimates for fiscal 2017 and 2018 witnessed considerable upward revisions in the last 30 days. The estimate for fiscal 2017 moved up by 6 cents to $3.28 per share, while estimate for fiscal 2018 escalated 4 cents to $3.51 per share.

Efficient Merchandising & Store Expansion Initiatives

Ross Stores’ continued focus on enhancing merchandise through investments in workforce, processes and technology, remains a key strategy to keep itself on the growth trajectory. The company constantly fine-tunes as well as upgrades systems and processes to enhance productivity. The company has been committed to improving its merchandise assortments in the ladies’ apparel business.

Additionally, Ross remains on track with respect to its store expansion program. Recently, the company opened 40 new stores in September and through Oct 9, including 30 Ross Dress for Less and 10 dd’s DISCOUNTS stores. With this Ross Stores has surpassed fiscal 2017 target of opening 90 stores, comprising 70 Ross and 20 dd’s DISCOUNTS outlets. These actions make us confident of growth potential and ability to successfully attain the target of expanding store count to 2,500, comprising 2,000 Ross and 500 dd’s DISCOUNTS stores, over the longer term.

Looking for More? Check these 3 Trending Retail Stocks

Other top-ranked stocks in the retail sector are Burlington Stores Inc. BURL, Dollar Tree Inc. DLTR and American Eagle Outfitters Inc. AEO, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Burlington Stores has an expected long term earnings growth rate of 17.5%. Further, the stock has returned 23.5% in the last three months.

Dollar Tree has gained nearly 26.8% in three months. Moreover, it has a long-term earnings growth rate of 13.1%.

American Eagle has improved 31.8% in the last three months. Further, the company has a long-term EPS growth rate of 8.7%.

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American Eagle Outfitters, Inc. (AEO) : Free Stock Analysis Report
 
Dollar Tree, Inc. (DLTR) : Free Stock Analysis Report
 
Ross Stores, Inc. (ROST) : Free Stock Analysis Report
 
Burlington Stores, Inc. (BURL) : Free Stock Analysis Report
 
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