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Is Ross Stores (ROST) Likely to Beat Earnings This Quarter?

Zacks Equity Research

We expect Ross Stores Inc. (ROST), one of the major off-price retailers of apparel and home accessories, to beat expectations when it reports third-quarter fiscal 2014 results on Nov 20, 2014. In the last quarter, the company posted a positive earnings surprise of 4.6%.

Why a Likely Positive Surprise?

Our proven model shows that Ross Stores is likely to beat earnings because it has the right combination of two key components.

Positive Zacks ESP: Ross Stores currently has an Earnings ESP of +1.15%. This is because the Most Accurate estimate stands at 88 cents, while the Zacks Consensus Estimate is pegged at 87 cents.

Zacks Rank #3 (Hold): Note that stocks with Zacks Ranks of #1, 2 and 3 have a significantly higher chance of beating earnings estimates. The Sell-rated stocks (Zacks Rank #4 and 5) should never be considered going into an earnings announcement.

The combination of Ross Stores’ Zacks Rank #3 and +1.15% ESP makes us confident of a positive earnings beat on Nov 20.

What is driving Better-than-Expected Earnings?

Ross Stores’ sustained focus on cost containment, inventory management and merchandise initiatives kept it afloat in a sluggish consumer environment. We believe that Ross Stores with its operational efficiencies as well as new and innovative collection remains well positioned to generate healthy sales. These factors helped the company to reap fabulous results last quarter and provide favorable earnings forecast for the second half of fiscal 2014. Going with the company’s forecast for the third quarter, we expect a likely positive surprise this quarter.

Stocks that Warrant a Look

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat:

Best Buy Co. Inc. (BBY) has an Earnings ESP of +4.17% and a Zacks Rank #1 (Strong Buy).

Campbell Soup Co. (CPB) has an Earnings ESP of +1.37% and a Zacks Rank #3.

DSW Inc. (DSW) has an Earnings ESP of +1.96% and a Zacks Rank #3.

Read the Full Research Report on BBY
Read the Full Research Report on ROST
Read the Full Research Report on CPB
Read the Full Research Report on DSW


Zacks Investment Research