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Ross Stores Shows Mixed Signals Ahead of Earnings Report

Ross Stores (ROST) experiences a minor gain, underperforming sector and index benchmarks. The upcoming earnings report may reveal a promising EPS rise and revenue growth, prompting investor interest and speculation on stock performance.

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AI Rating:   6

Ross Stores (ROST) has recently seen its stock price increase by +0.96%, outperforming the S&P 500's daily gain of 0.38%. However, when looking at a longer timeline, the stock's monthly performance of +0.72% falls behind the Retail-Wholesale sector's increase of 6.11% and the S&P 500's gain of 4.9%. This discrepancy may raise concerns for current and potential investors, as it indicates that ROST is lagging behind its peers.

As investors prepare for Ross Stores' upcoming earnings report, scheduled for November 21, 2024, key figures are anticipated. The consensus estimate predicts an EPS of $1.41, reflecting a positive 6.02% increase from the previous year. This projected growth in earnings per share could bolster investor confidence if achieved, showing that the company is improving its profitability. The expected revenue stands at $5.17 billion, a 5.01% growth from the same quarter last year. Both figures could positively affect stock prices, contingent upon meeting or exceeding these projections.

The full-year Zacks Consensus Estimates are calling for earnings of $6.20 per share and revenue of $21.27 billion, which translate to year-over-year increases of +11.51% for earnings and +4.39% for revenue. These enhancements in earnings and revenue would suggest effective business management, further reinforcing a bullish sentiment among investors.

Despite these positive expectations, the report indicates that the Zacks Consensus EPS estimate has remained unchanged over the last 30 days. This stagnation could signal a lack of recent positive momentum in analyst forecasts, which often drives stock price performance. A Zacks Rank of #3 (Hold) calls for cautious optimism, where the company is not performing poorly, but neither does it currently exhibit strong buy conditions.

On the valuation side, ROST trades at a Forward P/E ratio of 22.91, higher than the industry’s average of 19.98. A premium valuation might suggest that the market has already priced in the potential earnings growth, which could limit the upside for existing investors if the earnings report does not exceed expectations. Moreover, the PEG ratio stands at 2.3, matching the industry average without signifying clear relative value. So, while there are expectations of revenue and EPS growth that could positively influence ROST’s stock price, investors must weigh these considerations against current performance compared to industry peers and the overall market sentiment leading up to the earnings release.

Stocks:  ROST