Is Ross Stores (ROST) Poised to Beat Earnings Estimates? - Analyst Blog

We expect Ross Stores Inc. ROST, one of the major off-price retailers of apparel and home accessories, to beat expectations when it reports first-quarter fiscal 2014 results on May 22, 2014. In the last quarter, the company's earnings were in line with the Zacks Consensus Estimate.

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 +0.86%. This is because the Most Accurate Estimate stands at $1.17, while the Zacks Consensus Estimate is pegged at $1.16.

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 +0.86% ESP makes us very confident of a positive earnings beat on May 22.

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. The company's compelling business model has worked well as the competitive bargains it offers continue to make its stores an attractive destination for customers in all economic scenarios. We believe that Ross Stores with its operational efficiencies as well as new and innovative collection remains well positioned to generate healthy sales.

The company, in the last four quarters, has outperformed the Zacks Consensus Estimate by an average of 2.1%.

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:

The Kroger Co. KR has an Earnings ESP of +0.95% and a Zacks Rank #2 (Buy).

Lions Gate Entertainment Corp. LGF has an Earnings ESP of +7.69% and a Zacks Rank #3.

Best Buy Co., Inc. BBY has an Earnings ESP of +10.53% and a Zacks Rank #3.