Ross Stores Faces Mixed Market Response Ahead of Earnings Report

The latest report highlights Ross Stores' stock performance ahead of its earnings report, with projected EPS showing growth. However, the company's stock has lagged behind sector gains, suggesting a cautious investor outlook.

Date: 28-09-2024

AI Rating: 6

Ross Stores (ROST) has faced a challenging trading session, ending down 0.82% from its previous close while the broader market showed mixed results. Despite a slight monthly gain of 0.67%, this performance falls short of the Retail-Wholesale sector's 6.55% increase and the S&P 500's 2.43% rise.

Looking ahead, investors are closely monitoring ROST's upcoming earnings report. The projected EPS of $1.41 indicates a 6.02% year-over-year increase, which is a positive sign for potential profitability. Moreover, the anticipated revenue of $5.17 billion represents a 5.01% increase from the same quarter last year, which aligns with expectations for growth.

For the full year, the Zacks Consensus Estimates suggest that earnings are expected to reach $6.20 per share, reflecting an 11.51% year-over-year change, while revenue is forecasted at $21.27 billion, marking a 4.39% increase. These projections suggest that Ross Stores is on a positive trajectory regarding both earnings and revenue growth.

However, it's crucial to note some caution in the analysis. Over the past month, the Zacks Consensus EPS estimate has declined by 0.18%, signaling potential concerns among analysts regarding short-term performance. Additionally, a Zacks Rank of #3 (Hold) indicates a neutral sentiment among analysts, which could lead to reduced investor enthusiasm.

In terms of valuation metrics, Ross Stores currently has a Forward P/E ratio of 24.65, which is a premium compared to its industry average of 20.77. This high valuation could lead to investor skepticism if the company fails to meet expectations. Meanwhile, the company's PEG ratio of 2.48 is comparable to the industry, suggesting that the stock is fairly valued relative to its expected earnings growth.

The Retail - Discount Stores industry, of which Ross Stores is a part, has a Zacks Industry Rank of 191, placing it in the lower 25% of all industries. This lower rank could add further downward pressure on ROST's stock, as industries positioned in the bottom half generally underperform.

Stocks: ROST