Off-Price Retailer Ross Stores Sees Impressive Q3 Results, Analysts Bullish

Wells Fargo's Ike Boruchow raised their price target on Ross Stores (NASDAQ: ROST) by 3.7% from $135 to $140 on 2023/11/17. The analyst maintained their Strong Buy rating on the stock.

Boruchow's decision to increase the price target for Ross Stores comes after the company reported impressive Q3 2023 results. The Q3 2023 report was hailed as one of the company's "strongest prints thus far" by Boruchow, who noted a solid beat and rise in financial performance. The analyst attributed Ross Stores' success to the off-price segment's ability to attract value-seeking consumers in the face of macroeconomic pressures.

For the third quarter of 2023, Ross Stores reported earnings per share (EPS) of $1.33, surpassing the Zacks Consensus Estimate of $1.22 and showing a significant increase of 33% compared to Q3 2022's EPS of $1.00. The company also reported revenue of $4.92 billion, beating the Zacks Consensus Estimate of $4.84 billion and showing a 7.9% increase over Q3 2022's revenue of $4.57 billion. Additionally, Ross Stores achieved a same-store revenue growth of 5% during the quarter.

Looking ahead, Ross Stores' management provided guidance for Q4 2023 and FY 2023. For Q4 2023, the company expects EPS in the range of $1.56 to $1.62 and same-store revenue growth of 1% to 2%. For the full fiscal year 2023, Ross Stores anticipates EPS between $5.30 and $5.36.

CEO Barbara Rentler expressed satisfaction with the company's Q3 performance, highlighting the positive response from customers to the value offerings across their stores. Rentler also emphasized their commitment to complete a two-year $1.9 billion repurchase program by year-end, with plans to buy back $950 million in stock during FY 2023.

Rentler acknowledged the challenges posed by macroeconomic volatility, persistent inflation, and geopolitical uncertainty. Despite these factors, Rentler expressed confidence in the resilience of the off-price sector and Ross Stores' ability to navigate successfully within it. The company's value and convenience-focused business model aligns well with consumers' heightened focus on these factors, according to Rentler.

Apart from Ike Boruchow's rating and price target revision, other analysts also updated their views on Ross Stores on 2023/11/17. Dana Telsey of Telsey Advisory Group raised their price target by 3.8% from $130 to $135 while maintaining a Hold rating. Kimberly Greenberger of Morgan Stanley raised their price target by 4.6% from $131 to $137 and maintained a Strong Buy rating. Simeon Siegel of BMO Capital raised their price target by 8.7% from $127 to $138 and maintained a Buy rating.

Overall, 83.3% of top-rated analysts currently rate Ross Stores as a Strong Buy or Buy, while 8.3% see it as a Hold and 8.3% recommend or strongly recommend selling the stock.

The consensus forecast among analysts is that Ross Stores will deliver earnings per share (EPS) of $4.68 in the upcoming year. If the analysts' predictions are accurate, ROST's next yearly EPS will experience a modest decline of 1.3% compared to the previous year.

In terms of stock performance, Ross Stores has shown strong growth, with a year-over-year increase of 24.5%. During this period, Ross Stores has outpaced the performance of the S&P 500, which has seen a 14% increase.

It is worth noting that Ike Boruchow, the analyst who raised the price target on Ross Stores, is ranked in the top 21% of Wall Street analysts by WallStreetZen. Boruchow specializes in the Utilities and Consumer Cyclical sectors, with an average return of 1.4% and a win rate of 47.8%.

Ross Stores, Inc. is a leading off-price retail apparel and home fashion company that operates under the Ross Dress for Less and dd's DISCOUNTS brand names. The company offers a range of products, including apparel, accessories, footwear, and home fashions. As of July 5, 2022, Ross Stores operated approximately 1,950 stores across 40 states, the District of Columbia, and Guam.

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