Ross Stores(ROST) ZACKS·2024-12-18 14:25Core Viewpoint - Ross Stores, Inc. (ROST) is identified as an attractive value opportunity in the Retail - Discount Stores industry, trading at a forward price-to-earnings ratio of 22.8, which is below the industry average of 31.71x and the Retail-Wholesale average of 25.77x, indicating it is undervalued compared to peers [1] Financial Performance - ROST stock is currently priced at 163.60 reached on August 23, 2024 [2] - The stock is trading above its 200-day and 50-day moving averages of 146.19, respectively, indicating a sustained upward trend [2] - In the past month, ROST recorded growth of 8.6%, outperforming the broader Retail-Wholesale sector's return of 7.4% and the Zacks Retail - Discount Stores industry's growth of 3.9% [5] Sales and Growth Drivers - ROST experienced a 1% improvement in comparable store sales in the third quarter of fiscal 2024, driven by increased customer traffic and larger basket sizes, leading to a 3% year-over-year sales growth [8] - The company's business model emphasizes competitive bargains, making its stores appealing across various economic conditions, and its off-price model optimizes product allocation and improves margins [9][10] - Ross Stores plans to expand "Ross Dress for Less" to 2,900 stores and dd's DISCOUNTS to 700 stores, reflecting a consistent execution of its store expansion strategy [11] Earnings Estimates - Analysts have revised their EPS estimates upward, with fiscal 2024 and 2025 estimates increased by 1% to 6.67 per share, respectively, indicating expected year-over-year growth rates of approximately 10.9% and 8.1% [12] Future Outlook - For the fourth quarter of fiscal 2024, Ross Stores anticipates a more moderate growth trajectory, expecting comps growth of 2-3% compared to 7% in the prior year, with EPS projected to be 1.41, down from $1.82 [14] - The company has been facing higher costs, with COGS increasing by 1.9% year over year in the third quarter, and SG&A expenses rising by 2.8% year over year [15]