Solid Strategies To Drive Ross Stores' (ROST) Q4 Earnings

We expect Ross Stores, Inc. (NASDAQ:ROST) to beat expectations when it reports fourth-quarter fiscal 2017 results on March 6, after the market closes.

In the trailing four quarters, Ross Stores outperformed the Zacks Consensus Estimate by an average of 5.5% with a positive surprise in each quarter.

Last quarter, the company witnessed a positive earnings surprise of 7.5%. Let’s see how things are shaping up before this announcement.

Ross Stores, Inc. Price and EPS Surprise

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

What to Expect?

Investors are keen to know whether this California-based company will be able to continue its streak of positive earnings and revenue surprises. The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 93 cents, reflecting year-over-year growth of 20.8%. Notably, earnings estimate for the current quarter has been stable over the last 30 days. Analysts polled by Zacks expect revenues of $3.95 billion, up approximately 12.6% from the year-ago quarter.

In the past six months, Ross Stores has outperformed the industry. The stock has rallied 32.2% compared with the industry’s gain of 23.9%.

Factors at Play

Ross Stores has been continuing with its upbeat performance, recording a positive earnings surprise in 13 of the last 14 quarters. Moreover, top line surpassed the Zacks Consensus Estimate in the trailing four quarters.

The company’s strong performance can be attributed to its solid endeavors, including better price management, merchandise, cost containment and store expansion plans. Furthermore, Ross Stores’ off-price model offers strong value proposition and micro-merchandising that drive better product allocation and margins. This, in turn, will help sustain the company’s top-line growth trends.

Meanwhile, Ross Stores remains focused on its merchandising organization through investments in workforce, processes and technology. In fact, the company has been committed to improving its merchandise assortments in the ladies’ apparel business. These initiatives strengthen Ross’ buying operation, facilitating the purchase of in-trend merchandise at attractive prices.

For the fourth quarter, the company’s raised sales and earnings view. Ross Stores anticipates sales growth in the range of 11-12%, including a benefit from the additional 53rd week. Moreover, earnings per share are expected to lie in the range of $3.24-$3.28. These factors make us optimistic about results in the upcoming quarter.

What the Zacks Model Unveils

Our proven model shows that Ross Stores is likely to beat estimates this quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. 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 +1.37% and a Zacks Rank #2.

Stocks Poised to Beat Earnings Estimates

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 Inc. (NASDAQ:DLTR) has an Earnings ESP of +1.99% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Burlington Stores, Inc. (NYSE:BURL) has an Earnings ESP of +1.92% and a Zacks Rank of 2.

Big Lots, Inc. (NYSE:BIG) has an Earnings ESP of +0.87% and a Zacks Rank #2.

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