Things You Must Know Ahead of Ross Stores' (ROST) Q2 Earnings
Ross Stores, Inc. ROST is scheduled to release second-quarter fiscal 2020 results on Aug 20. The off-price retailer of apparel and home accessories substantially missed the Zacks Consensus Estimate in the last reported quarter.
The Zacks Consensus Estimate for the fiscal second quarter is pegged at a loss of 26 cents, suggesting a decline of 123.3% from the year-ago period’s reported figure. Notably, the consensus estimate has been unchanged in the past 30 days. Moreover, the consensus mark for revenues is pegged at $2.57 billion, indicating a decline of 35.5% from the figure reported in the year-ago quarter.
Factors to Note
Driven by the impacts of the coronavirus outbreak-led closure of stores and distribution centers, Ross Stores witnessed a stark decline in the top and bottom lines in the last reported quarter. However, the company has been reopening stores and distribution centers in a phased manner since May 14. The gradual reopening of stores is expected to have aided the top line in the to-be-reported quarter to some extent. Also, its commitment toward pricing, merchandise initiatives and cost containment bode well.
Ross Stores, Inc. Price and EPS Surprise
Ross Stores, Inc. price-eps-surprise | Ross Stores, Inc. Quote
Nonetheless, on the last-quarter earnings call, the company expected a large majority of the markdown activity to occur in the fiscal second quarter. These markdowns, though necessary to clear the excess spring inventory, are likely to have weighed on its margins in the fiscal second quarter.
While the company reported declines in COGS and SG&A expenses in the last reported quarter, it expects operating costs to be a bit elevated in the fiscal second quarter as it resumes operations. It expects incurring additional costs for the fiscal second quarter related to the operating of stores and offices, including the implementation of social-distancing protocols, cleaning practices and significant costs for personal protective equipment.
Zacks Model
Our proven model does not conclusively predict an earnings beat for Ross Stores this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Ross Stores has a Zacks Rank #3 (Hold) and an Earnings ESP of -7.69%.
Stocks With Favorable Combination
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:
Target Corporation TGT currently has an Earnings ESP of +15.13% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Dollar General Corporation DG presently has an Earnings ESP of +6.84% and a Zacks Rank #2.
The Home Depot, Inc. HD currently has an Earnings ESP of +10.73% and a Zacks Rank #3.
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