Ross Stores (ROST) delivered better-than-expected Q3 2021 results as consumers reacted favorably to its assortment of bargains. Revenue and earnings topped consensus estimates even as the company felt the impact of uncertainty owing to the spread of COVID-19 variants.
Ross Stores is a California-based retail store for apparel and home accessories. Its products include branded and designer apparel footwear, and home fashions. (See Top Smart Score Stocks on TipRanks)
Q3 Results
The company delivered a net income of $385 million. Diluted earnings per share (EPS) landed at $1.09, exceeding consensus estimates of $0.78. Sales in the quarter were up 19% year-over-year to $4.6 billion, beating consensus estimates of $4.33 billion. Comparable store sales grew 14%.
According to CEO Barbara Rentler, Ross Stores delivered positive Q3 results amid waning government stimulus. Though better-than-expected, an operating margin of 11.4% was affected by headwinds from higher freight, and COVID-related costs and wages.
During the quarter, Ross repurchased 2.1 million shares for $241 million. For the first nine months of fiscal 2021, the company has bought 3.5 million shares for $417 million. The company is on track to buy back $650 million worth of shares for fiscal 2021.
For the fourth quarter, management expects comparable-store sales gains of between 7% and 9%. Earnings per share, on the other hand, are expected to range between $0.83 and $0.93. For the full year, EPS is expected to range from $4.65 and $4.75 on a comparable-store sales gain of 12% and 13%.
Stock Rating
Consensus among analysts is a Moderate Buy based on four Buys and three Holds. The average Ross Stores price target of $136 implies 17.8% upside potential to current levels.
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