Ross Stores Q2 Earnings Upcoming: Will It Surprise Investors?

Core Insights - Ross Stores, Inc. (ROST) is anticipated to show revenue growth in its second-quarter fiscal 2025 results, with earnings per share (EPS) estimated at $1.52, reflecting a 4.4% decrease from $1.59 in the same period last year [1] - The revenue consensus estimate stands at $5.53 billion, indicating a 4.7% increase from the previous year's quarter [1] Earnings Performance - ROST has a trailing four-quarter earnings surprise average of 6.1%, with a 2.8% surprise in the last reported quarter [2] - The company has an Earnings ESP of +0.49% and a Zacks Rank of 3, suggesting a favorable outlook for an earnings beat [3] Factors Influencing Q2 Results - Strong growth across merchandise categories and positive customer responses are expected to bolster ROST's performance [4] - The off-price retail model and micro-merchandising strategy are likely to attract value-focused shoppers and optimize inventory allocation [5] - Comparable sales trends have been favorable, with expectations of flat to 3% growth in comps for Q2 [6] Store Expansion and Market Conditions - Consistent execution of store expansion plans is anticipated to contribute to top-line growth [7] - The company is cautious about macroeconomic uncertainties and inflation impacting consumer spending [7] Tariff and Cost Pressures - ROST faces renewed tariff headwinds due to evolving trade policies and elevated duties on goods sourced from China, which could pressure its cost structure [8] - The company expects Q2 revenues of $5.53 billion, with EPS guidance of $1.40-$1.55, reflecting a year-over-year decline primarily due to tariff-related costs [9][11] Margin Compression and Guidance - ROST is preparing for short-term margin compression, with anticipated impacts from tariffs and inflation limiting pricing flexibility [10][11] - The company has withdrawn its fiscal 2025 sales and earnings guidance due to uncertainties [10] Valuation and Stock Performance - ROST is trading at a forward 12-month price-to-earnings ratio of 22.53X, lower than the industry average of 32.67 [12] - The stock has declined by 4.7% over the past three months, compared to a 2.7% decline in the industry [14]