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Ross Stores (ROST) to Post Q3 Earnings: What to Expect?

Ross Stores Inc.ROST , one of the major off-price retailers of apparel and home accessories, is set to report third-quarter fiscal 2015 results on Nov 19. Last quarter, it posted a positive earnings surprise of 1.6%. Let us see how things are shaping up for this announcement.

Factors Influencing This Quarter

Ross Stores outperformed the Zacks Consensus Estimate by an average of 5.9% over the last four quarters. The company is gaining on favorable response from value-focused customers toward its extensive collection of brand bargains and efficient cost controls. With its strategy of providing customers with attractive bargains and an off-price business model, Ross Stores remains well positioned to exploit opportunities amid all climates.

Further, following a strong first half, the company raised its earnings guidance for fiscal 2015. However, management provided a cautious outlook for the second half of the fiscal as it expects difficult sales and earnings comparisons for the third and fourth quarters, raising concerns about the quarter to be reported. Consequently, we are slightly cautious of the upcoming results.

Earnings Whispers

Our proven model does not conclusively show that Ross Stores is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here as you will see below:

Zacks ESP: Earnings ESP for Ross Stores is -2.00%. This is because the Most Accurate Estimate of 49 cents stands below the Zacks Consensus Estimate of 50 cents.

Zacks Rank: Ross Stores' Zacks Rank #3 (Hold) increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

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:

Abercrombie & Fitch Co. ANF has an Earnings ESP of +15.79% and a Zacks Rank #3.

Chico's FAS Inc. CHS has an Earnings ESP of +5.00% and a Zacks Rank #3.

Costco Wholesale Corporation COST has an Earnings ESP of +1.72% and a Zacks Rank #3.

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ABERCROMBIE (ANF): Free Stock Analysis Report

COSTCO WHOLE CP (COST): Free Stock Analysis Report

ROSS STORES (ROST): Free Stock Analysis Report

CHICOS FAS INC (CHS): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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