Will Ross Stores (ROST) Deliver Another Earnings Beat In Q2?

Ross Stores Inc. (NASDAQ:ROST) is slated to release second-quarter fiscal 2016 results on Aug 18. Last quarter, the company posted earnings in line with the Zacks Consensus Estimate.

In fact, the company has outperformed the Zacks Consensus Estimate by an average of 2.7% over the trailing four quarters. Let’s see how things are shaping up for this announcement.

Factors Influencing this Quarter

Ross Stores, which has been gaining from the favorable response of value-focused customers to its extensive collection of brand bargains and efficient cost controls, remains confident of its future performance. Ross Stores’ strategy to keep itself on the growth trajectory involves a continued focus on merchandising organization through investments in workforce, processes and technology. With a solid financial status, ongoing merchandise initiatives and consistent focus on store expansion, Ross Stores remains confident of performing well this year.

For the fiscal second quarter, the company expects earnings in the range of 64–67 cents per share compared with 63 cents earned in the prior-year quarter. Total sales are expected to grow 4–5%, with comps expected to be up 1–2%.

However, Ross Stores expects to face challenges related to strong comparisons, amid macroeconomic uncertainty and a volatile retail landscape, which may slightly impact results.

Earnings Whispers

Our proven model does not conclusively show that Ross is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:

Zacks ESP: Earnings ESP for Ross Stores is currently pegged at 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 67 cents.

Zacks Rank: Ross Stores’ Zacks Rank #3 (Hold) increases the predictive power of ESP. However, the company’s ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks Poised to Beat Earnings Estimates

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

Best Buy Co. Inc. (NYSE:BBY) , scheduled to report earnings on Aug 23, has an Earnings ESP of +7.14% and a Zacks Rank #2 (Buy).

GameStop Corp. (NYSE:GME) , scheduled to report earnings on Aug 25, has an Earnings ESP of +7.14% and a Zacks Rank #2.

DSW Inc. (NYSE:DSW) , scheduled to report earnings on Aug 30, has an Earnings ESP of +6.90% and a Zacks Rank #2.