On Friday, CFRA maintained a Hold rating on Ross Stores, Inc. (NASDAQ:ROST) with a steady stock price target of $138.00. The firm's valuation is based on their fiscal year 2025 (January) earnings per share (EPS) estimate, applying a price-to-earnings (P/E) multiple of 23.0 times, which is slightly below the company's five-year average forward P/E multiple of 23.9 times. CFRA has kept its EPS forecasts unchanged for fiscal years 2025 and 2026 at $6.00 and $6.40, respectively.
Ross Stores reported a normalized first-quarter EPS of $1.46, surpassing the $1.09 from the previous year and beating consensus estimates by $0.11. Revenue figures also exceeded expectations, with $4.86 billion reported against the anticipated $4.50 billion, marking a $32 million surplus over estimates. Comparable store sales saw a year-over-year increase of 3%, contributing to an overall revenue increase of 8%.
Management highlighted that Accessories and Children's categories were the top performers in sales. Geographically, California and the Pacific Northwest emerged as the strongest regions. The company also noted that its dd's Discounts chain performed better than the main Ross stores, attributing this success to customers' positive response to the value offered.
Inventory levels were up by 10% year-over-year, with average store inventory rising 4%, aligning with sales growth. Looking ahead, Ross Stores has guided for comparable store sales to increase by 2% to 3% and projected a high-point EPS of $5.98.
In their commentary, CFRA acknowledged Ross Stores' solid business model and execution but cited a full valuation for maintaining a neutral stance on the stock. The firm expressed satisfaction with the company's performance but sees the current stock valuation as reflective of its potential, leading to their decision to uphold a Hold rating.
InvestingPro Insights
InvestingPro data reveals that Ross Stores, Inc. (NASDAQ:ROST) holds a market capitalization of $48.43 billion, with a P/E ratio of 24.14, reflecting investor sentiment on its earnings capacity. The company's revenue growth over the last twelve months as of Q4 2024 stands at 8.99%, indicating a robust expansion in its business operations.
Notably, Ross Stores has demonstrated a solid dividend track record, with an 18.55% dividend growth in the last twelve months and maintenance of dividend payments for 31 consecutive years, as highlighted by InvestingPro Tips.
Another InvestingPro Tip points out that Ross Stores is trading at a low P/E ratio compared to its near-term earnings growth, suggesting potential value for investors looking at earnings multiples. With a PEG ratio of 0.88, the company's price-to-earnings growth ratio underscores this value proposition. Moreover, Ross Stores has been commended for its low price volatility, providing a degree of stability in an investor's portfolio.
For those seeking further insights and detailed analysis, InvestingPro offers additional tips and metrics on Ross Stores. By using the coupon code PRONEWS24, readers can get an extra 10% off a yearly or biyearly Pro and Pro+ subscription, gaining access to a comprehensive suite of investment tools and data to make informed decisions.
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