Ross Stores Gears Up for Q1 Earnings: Will Investors See a Surprise?

Core Viewpoint - Ross Stores, Inc. is anticipated to experience revenue growth while facing a decline in earnings per share for the first quarter of fiscal 2025, with earnings estimated at $1.43 per share, a decrease of 2.1% from the previous year [1][2]. Revenue and Earnings Estimates - The consensus estimate for quarterly revenues is $4.97 billion, reflecting a growth of 2.3% compared to the same quarter last year [2]. - The company has a trailing four-quarter earnings surprise average of 7.7%, with the last reported quarter showing an earnings surprise of 8.5% [2]. Earnings Prediction Model - The earnings prediction model indicates a likely earnings beat for Ross Stores, supported by a positive Earnings ESP of +1.27% and a Zacks Rank of 3 [3]. Factors Influencing Q1 Results - Strong growth across merchandise categories and positive customer responses are expected to bolster performance, particularly appealing to price-conscious consumers [4]. - The off-price retail model and micro-merchandising strategy are anticipated to attract value-focused shoppers and optimize inventory allocation [5]. Store Expansion and Market Conditions - Consistent execution of store expansion plans is expected to contribute to top-line growth, with new store contributions reflected in the upcoming results [6]. - The company remains cautious about macroeconomic uncertainties and inflation affecting consumer spending on essentials [6]. Sales and Margin Expectations - For Q1 fiscal 2025, Ross Stores anticipates comparable store sales (comps) to decline between 3% and flat, with total sales projected to decrease by 1% to increase by 3% year-over-year [7]. - Operating margin is expected to be in the range of 11.4% to 12.1%, down from 12.2% last year, with a projected operating margin of 11.7% for the quarter [7][8]. Valuation and Stock Performance - Ross Stores is trading at a forward 12-month price-to-earnings ratio of 23.13x, which is lower than the industry average of 32.49x [9]. - The stock has gained 9.5% over the past three months, outperforming the industry growth of 3.8% [10].