Ross Stores, Inc. (NASDAQ: ROST) stock recovers on decent earnings

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Ross Stores, Inc. (NASDAQ: ROST) stock rose over 1% in the pre-market session of November 22nd, 2019 (as of 7:55 pm GMT-5; Source: Google finance) after the company posted better than expected earnings & comparable-store sales for the third quarter of FY 19. The company generated over 34.36% in this year to date (as of November 21st, 2019; Source: Finviz)

Ross has reported the net income of $371 million, in the quarter, compared to $338 million, in the same period last year.  The company has opened 30 new Ross and 12 dd’s DISCOUNTS locations in the third quarter, and completed the 2019 store opening program. The company expects to end the year with 1,546 Ross and 259 dd’s locations for a net increase of 89 for fiscal 2019.

Meanwhile, for the third quarter, the company saw broad-based strength across both merchandise departments and geographic regions with children’s and the Midwest performing the best. The company also continue to see improving sales trends in the ladies apparel business. Operating margin were 12.4% was above plan mainly on the back of better-than-expected sales and merchandise margin.

ROST in the third quarter of FY 19 has reported the adjusted earnings per share of $1.03, beating the analysts’ estimates for the adjusted earnings per share of 98 cents, according to analysts polled by FactSet. The company had reported the adjusted revenue growth of 8 percent to $3.8 billion in the third quarter of FY 19, beating the analysts’ estimates for revenue of $3.8 billion. Comparable-store sales rose 5% on top of last year’s gain of 3%, surpassing the analysts’ expectation of same-store sales to be 2.8% higher.

Additionally, during the third quarter of fiscal 2019, the company had repurchased 3 million of common stock for a total purchase price of $326 million. ROST is on track to buyback a total of $1.275 billion in stock for the year.

ROST continue to anticipate fourth quarter comparable store sales gains to be in the range of 1% to 2% versus a 4% increase last year. For the fourth-quarter, the company expects EPS to be between $1.20 and $1.25 and expects fiscal 2019 EPS to be in the range of $4.52 and $4.57, up from $4.26 in fiscal 2018.

Further in the fourth quarter, total sales are expected to grow in the range of 5% to 6%, operating margin is expected to be in the range 13% to 13.2%, compared to last year’s 13.2%. The company expect net interest income of about $2.3 million. The tax rate is expected to be in the range of approximately 22% to 23%, which includes the one-time tax benefit and weighted average diluted shares outstanding are projected to be about $357 million.

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