👀 Ones to watch: The MOST undervalued stocks to buy right nowSee Undervalued Stocks

Ross Stores stock leaps 7% on earnings beat, strong margins

EditorVahid Karaahmetovic
Published 11/21/2024, 04:27 PM
Updated 11/22/2024, 05:02 AM
ROST
-

 

DUBLIN, Calif. - Ross Stores, Inc. (NASDAQ:ROST) saw its stock jump 7% in premarket trading Friday after reporting third-quarter earnings that beat analyst expectations, despite sales falling short of estimates.

The off-price retailer posted earnings per share of $1.48 for the quarter ended November 2, 2024, surpassing the analyst consensus of $1.40. Revenue came in at $5.07 billion, below the $5.16 billion analysts had projected. Comparable store sales increased 1% YoY.

While sales growth slowed from the first half of 2024, CEO Barbara Rentler noted that earnings exceeded internal forecasts. 

Gross margin expanded to 28.3%, up 71 basis point year-over-year, and above the consensus estimate of 27.5%. Operating margin also rose to 11.9% from 11.2%, and above the estimated 11.1%, as lower costs offset a planned decline in merchandise margin.

"Although our low-to-moderate income customers continue to face persistently high costs on necessities pressuring their discretionary spending, we believe we should have better executed some of our merchandising initiatives," Rentler said.

For the fourth quarter, Ross Stores expects comparable store sales to rise 2% to 3%. The company forecasts Q4 EPS of $1.57 to $1.64, below the $1.67 consensus estimate. However, full-year EPS guidance of $6.10 to $6.17 brackets analyst expectations of $6.13.

Morgan Stanley (NYSE:MS) analysts reiterated an Overweight rating on ROST shares after the report, highlighting an "ongoing margin recapture opportunity & value positioning in a tough 4Q Retail set-up." However, the firm said it remains wary of "continued assortment challenges & high valuation implied by the post-print stock move."

Meanwhile, Jefferies analysts said ROST "will continue to benefit from value-conscious consumers; however, we still prefer TJX/BURL in the Off-Price space."

Ross Stores repurchased 1.8 million shares for $262 million in Q3 and remains on track to buy back $1.05 billion in stock during fiscal 2024.

The company operated 2,192 Ross and dd's DISCOUNTS locations as of quarter-end, up from 2,112 stores a year ago.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

 

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.