Ross Stores (ROST) closed at $140.78 in the latest trading session, marking a +1.01% move from the prior day. The stock outpaced the S&P 500's daily gain of 0.58%. Elsewhere, the Dow gained 0.75%, while the tech-heavy Nasdaq added 0.55%.Prior to today's trading, shares of the discount retailer had gained 9.06% over the past month. This has outpaced the Retail-Wholesale sector's loss of 0.19% and the S&P 500's loss of 0.84% in that time.Analysts and investors alike will be keeping a close eye on the performa ...

Core Viewpoint - Ross Stores, Inc. (ROST) is trading at a discount compared to its industry peers, with a forward P/E ratio of 21.41X, significantly lower than the industry average of 31.61X, making it an attractive opportunity for long-term, value-focused investors [1][4]. Valuation Comparison - ROST's valuation is compelling when compared to major discount retailers such as Costco (51.07X), Burlington (23.14X), and TJX (27.93X) [4]. Stock Performance - ROST stock has shown a growth of 9.3% over the past month, outperforming the broader Retail-Wholesale sector's decline of 0.2% and the Zacks Retail - Discount Stores industry's growth of 3% [5]. - In comparison, peers like TJX and Costco gained 3.9% and 3.3%, while Burlington lost 6.4% during the same period [6]. Sales Growth - ROST experienced a 3% improvement in comparable store sales in Q4 fiscal 2024, driven by increased customer traffic and larger basket sizes, resulting in a year-over-year sales growth of 3% [10]. - The company's business model focuses on competitive bargains and off-price retailing, which has helped maintain its appeal across various economic conditions [11][12]. Expansion Plans - ROST plans to open 19 new stores in Q1 fiscal 2025, including 16 Ross and 3 dd's DISCOUNTS, with an overall target of approximately 90 new locations for fiscal 2025 [13]. Earnings Estimates - The Zacks Consensus Estimate for ROST's earnings per share has increased by 1.4% and 7.8% for fiscal 2025 and 2026, respectively [14]. Near-Term Challenges - Despite its strengths, ROST faces challenges due to macroeconomic volatility, rising inflation, and geopolitical uncertainty, which have affected consumer confidence and discretionary spending [15][16]. - For Q1 fiscal 2025, ROST anticipates comparable store sales to be flat to down by 3%, with total sales projected to decline by 1% to increase by 3% year-over-year [16][17]. Strategic Focus - ROST's strategy emphasizes value-oriented off-price retailing, delivering branded and designer goods at discounted prices, which has helped maintain its competitive advantage [19].

When deciding whether to buy, sell, or hold a stock, investors often rely on analyst recommendations. Media reports about rating changes by these brokerage-firm-employed (or sell-side) analysts often influence a stock's price, but are they really important?Let's take a look at what these Wall Street heavyweights have to say about Ross Stores (ROST) before we discuss the reliability of brokerage recommendations and how to use them to your advantage.Ross Stores currently has an average brokerage recommendatio ...

Macroeconomic Risks - The company is facing significant risks from macroeconomic factors, including elevated inflation and potential supply chain disruptions, which could adversely affect sales and profitability[60]. - Changes in U.S. trade or tax policy regarding apparel and home-related merchandise could increase costs and reduce profitability, as a large portion of goods is sourced from overseas[63]. - Consumer spending levels are influenced by various external factors, including inflation and unemployment rates, which could affect demand for the company's merchandise[62]. - The company must navigate risks associated with importing merchandise, including tariffs and geopolitical conflicts, which could disrupt supply chains and increase costs[74]. Competitive Landscape - The competitive landscape in the retail industry is intensifying, with increased competition from both traditional and online retailers, which may negatively impact sales and margins[64]. - The company needs to secure favorable store locations based on consumer demographics to achieve planned growth, which may be challenging due to competition[72]. - Expansion into new geographic markets carries risks, including higher costs and the need for increased marketing investments to build brand awareness[73]. Operational Challenges - Labor shortages and increased turnover rates may impact the company's ability to execute its retail strategies effectively, potentially affecting operating results[69]. - Effective inventory management is crucial, as excess inventory or markdowns on slow-moving items could lead to decreased profit margins[78]. - Disruptions in the supply chain or logistics could impair the company's ability to meet customer demand, resulting in lost sales or increased costs[86]. - The company has a concentration of store locations in California, Texas, and Florida, which together account for almost 50% of its stores, making it vulnerable to regional disasters[91]. Technology and Cybersecurity - The company is making technology investments to improve information systems, but excessive technological change could disrupt operations and impact competitive positioning[84]. - The company is exposed to cybersecurity threats, including data breaches and ransomware attacks, which could disrupt operations and lead to significant legal exposure[80]. Financial Position - The company relies on strong cash flows from operations to support growth plans, capital expenditures, and shareholder returns, making liquidity essential[89]. - A hypothetical 100 basis point change in market interest rates would not materially impact the company's financial position or results[181]. - The company has no outstanding forward contracts as of February 1, 2025, to hedge against foreign currency fluctuations[178]. - The company has six series of unsecured Senior Notes with fixed interest rates, insulating it from market interest rate changes[179]. Compliance and Vendor Risks - Legal and regulatory compliance issues could result in increased costs and damage to the company's reputation, affecting sales[92]. - The company faces risks related to vendor compliance with safety and quality standards, which could lead to product recalls and increased costs[93].

Group 1 - The article discusses Ross Stores (NASDAQ: ROST) and expresses a cautious outlook on its valuation, which may limit the stock's upside potential [1] - The 4Q24 results for Ross Stores appeared satisfactory, but the overall sentiment remains cautious due to valuation concerns [1] Group 2 - The author emphasizes a diverse investment approach, incorporating fundamental, technical, and momentum investing strategies to enhance the investment process [1]

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on Ross Stores (ROST), and highlights the potential misalignment of interests between brokerage firms and retail investors [1][4][9]. Brokerage Recommendation Summary - Ross Stores has an average brokerage recommendation (ABR) of 1.70, indicating a consensus between Strong Buy and Buy, based on 23 brokerage firms' recommendations [2]. - Out of the 23 recommendations, 15 are classified as Strong Buy, accounting for 65.2% of the total recommendations [2]. Zacks Rank vs. ABR - The Zacks Rank, a proprietary stock rating tool, categorizes stocks from 1 (Strong Buy) to 5 (Strong Sell) and is based on earnings estimate revisions, making it a more effective indicator of near-term stock performance compared to ABR [7][10]. - Unlike ABR, which is based solely on brokerage recommendations and may not be up-to-date, Zacks Rank reflects timely changes in earnings estimates, providing a more accurate indication of future price movements [8][11]. Earnings Estimate Trends for Ross Stores - The Zacks Consensus Estimate for Ross Stores has decreased by 4% over the past month to $6.43, indicating growing pessimism among analysts regarding the company's earnings prospects [12]. - This decline in earnings estimates has contributed to a Zacks Rank of 4 (Sell) for Ross Stores, suggesting caution despite the favorable ABR [13].

Core Viewpoint - Telsey Advisory analyst Dana Telsey has reiterated a Market Perform rating on Ross Stores Inc (ROST) and lowered the price forecast from $175.00 to $150.00, reflecting concerns over the company's future performance and outlook [1]. Financial Performance - ROST reported fourth-quarter EPS of $1.79, slightly lower than last year's $1.82 but above the consensus estimate and guidance of $1.57 – $1.64, with the earnings beat driven by a $0.14 one-time gain from the sale of a packaway facility [1]. - Sales decreased by 1.8% to $5.912 billion, slightly missing consensus expectations [1]. Margins and Growth - Comparable store sales grew by 3%, outperforming the 2.6% consensus, while gross margin contracted to 26.5%, below estimates; however, better cost control led to an operating margin of 12.4%, beating expectations [2]. - The initial FY25 outlook for total sales growth is projected at 1% – 5%, which falls short of expectations [2]. Future Guidance - FY25 EPS is estimated to be between $5.95 – $6.55, lower than the $6.32 reported in FY24 and below the consensus of $6.67 [3]. - The first-quarter FY25 guidance is also below expectations, with sales projected to decline by 1% to increase by 3%, compared to a prior consensus of a 6% rise; comparable store sales are expected to fall between -3% and 0%, below the consensus of 2.4% [3]. Market Conditions - The company experienced growth in traffic and basket size; however, sales slowed toward the end of the fourth quarter and continued to decelerate into the first quarter due to unseasonable weather and an uncertain macro environment [4]. - The company faces pressure from shifts affecting its core lower-income customers, leading to conservative outlooks for the first quarter and FY25 [4]. Revised Projections - The analyst has lowered the FY25 sales growth outlook to 4.6% YoY growth to $22.09 billion, down from a previous estimate of 5.7% growth to $22.33 billion; the EPS estimate for FY25 has been adjusted down to $6.54 from $6.70 [5]. - ROST shares are trading higher by 1.38% at $137.84 as of the last check [5].

Core Insights - Ross Stores, Inc. reported mixed results for Q4 fiscal 2024, with earnings surpassing estimates but sales missing expectations [1][3][4] - The company experienced a year-over-year increase in net sales, but earnings declined compared to the previous year [1][3] Financial Performance - Earnings per share (EPS) for Q4 was $1.79, exceeding the Zacks Consensus Estimate of $1.65, but down 1.6% from $1.82 in Q4 fiscal 2023 [3] - Total sales reached $5.91 billion, a 3% increase year-over-year, but fell short of the Zacks Consensus Estimate of $5.95 billion [4] - Comparable store sales (comps) grew by 3%, surpassing the expected increase of 2.4% [4] Cost and Profitability - Cost of goods sold (COGS) was $4.3 billion, up 0.7% year-over-year, representing 73.5% of sales, an increase of 80 basis points from the previous year [5] - Gross profit decreased by 4.7% year-over-year to $1.569 billion, with gross margin contracting 80 basis points to 26.5% [6] - Operating income rose 1.8% year-over-year to $731 million, with an operating margin of 12.4%, remaining flat year-over-year [7] Shareholder Returns - The company ended fiscal 2024 with cash and cash equivalents of $4.7 billion and long-term debt of $1.5 billion [10] - Ross Stores repurchased 1.7 million shares for $262 million in Q4, totaling 7.3 million shares for $1.05 billion in fiscal 2024 [11] - A 10% increase in the quarterly cash dividend to 40.5 cents per share was approved, payable on March 31, 2025 [12] Future Outlook - Sales trends softened in early 2025 due to unseasonable weather and macroeconomic volatility, leading to a cautious business forecast [13] - For Q1 fiscal 2025, the company anticipates comps to decline between 3% and flat, with EPS expected to be in the range of $1.33 to $1.47 [14] - For the fiscal year ending January 31, 2026, EPS is projected to be between $5.95 and $6.55 [15]

Financial Data and Key Metrics Changes - For Q4 2024, earnings per share were $1.79 compared to $1.82 for Q4 2023, with net income at $587 million versus $610 million last year [10] - Total sales for Q4 2024 were $5.9 billion, with a comparable store sales gain of 3% on top of a 7% gain in the same period last year [10] - For fiscal 2024, earnings per share increased to $6.32 from $5.56 in fiscal 2023, with net income rising to $2.1 billion compared to $1.9 billion last year [11] - Total sales for fiscal 2024 increased to $21.1 billion, up from $20.4 billion in the prior year [11] Business Line Data and Key Metrics Changes - Cosmetics and children's merchandise were the best-performing areas during the holiday season, while DD's discounts posted healthy sales gains [14] - The operating margin for Q4 was 12.4%, flat compared to last year, with a 105 basis point benefit from the sale of a packaway facility [13][20] - Merchandise margin declined by 85 basis points due to an increased mix of quality branded assortments [21] Market Data and Key Metrics Changes - The Pacific Northwest and Texas were the strongest regions for sales performance, while California and Florida were in line with the chain average [52] - Consolidated inventories were up 12%, mainly due to higher planned packaway levels, with packaway representing 41% of total inventories compared to 40% last year [15] Company Strategy and Development Direction - The company plans to open approximately 90 new locations in fiscal 2025, including about 80 Ross and 10 DD's, while closing or relocating about 10 to 15 older stores [29] - The management believes the brand and merchandising strategies for both Ross and DD's are sound and will continue to be pursued without significant changes [40][41] - The company aims to enhance its store environment and marketing efforts, with a focus on prudent investment and potential ROI [72] Management's Comments on Operating Environment and Future Outlook - Management noted that sales trends began softening later in January and into February due to unseasonable weather and macroeconomic volatility [23] - The company expects comparable store sales for Q1 2025 to be down 3% to flat, with earnings per share projected between $1.33 and $1.47 [24] - Management remains optimistic about the potential for closeout merchandise opportunities due to the current retail environment [34] Other Important Information - The company repurchased 1.7 million shares for $262 million in Q4 2024, totaling 7.3 million shares for $1.05 billion in fiscal 2024 [16] - A 10% increase in the quarterly cash dividend to $0.405 per share was approved, payable on March 31, 2025 [17] Q&A Session Summary Question: Can you elaborate on your top strategic priorities? - The CEO indicated that the brand strategy for Ross and customer strategy for DD's are sound and will continue to be pursued, with a focus on learning the off-price model [40] Question: Can you discuss regional performance in Q4? - The Pacific Northwest and Texas were top-performing regions, while California and Florida were in line with the chain [52] Question: How do you view the impact of weather on sales? - Management noted that weather-impacted areas saw declines, but improvements were observed as weather conditions improved [46] Question: What is the outlook for merchandise margins? - Merchandise margins are expected to be relatively neutral for fiscal 2025, with ongoing adjustments based on customer feedback [64] Question: How is the company handling tariffs? - The company is monitoring tariff changes closely and plans to maintain price competitiveness while exploring closeout opportunities [110][111] Question: What is the strategy for store openings? - The company sees growth potential with existing store formats and plans to continue opening new stores in various markets [117] Question: How does the company plan to enhance marketing efforts? - The CEO acknowledged the need for improved marketing and messaging, with plans to invest in these areas over time [134]

Company Performance - Ross Stores reported quarterly earnings of $1.79 per share, exceeding the Zacks Consensus Estimate of $1.65 per share, but down from $1.82 per share a year ago, representing an earnings surprise of 8.48% [1] - The company posted revenues of $5.91 billion for the quarter ended January 2025, missing the Zacks Consensus Estimate by 0.63% and down from $6.02 billion year-over-year [2] - Over the last four quarters, Ross Stores has surpassed consensus EPS estimates four times and topped consensus revenue estimates two times [2] Stock Outlook - Ross Stores shares have declined approximately 9.6% since the beginning of the year, compared to a decline of 0.5% for the S&P 500 [3] - The company's earnings outlook is mixed, with a current Zacks Rank of 3 (Hold), indicating expected performance in line with the market in the near future [6] - The current consensus EPS estimate for the upcoming quarter is $1.52 on revenues of $5.08 billion, and for the current fiscal year, it is $6.63 on revenues of $22.24 billion [7] Industry Context - The Retail - Discount Stores industry, to which Ross Stores belongs, is currently ranked in the top 24% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact investor sentiment and stock performance [5]