Shares of Ross Stores (NASDAQ:ROST) came under pressure and fell about 1.8% in Tuesday’s after-hours trading despite beating analysts’ Q4 estimates. The company provided a conservative outlook for 2024, which irked investors.
The company, which operates a chain of discount department stores, expects pressure on consumers’ discretionary spending due to higher housing, food, and gasoline costs. This could impact its growth rate in 2024.
Ross Stores Beats Street’s Forecasts
Ross Stores delivered better-than-expected Q4 financial results. Its revenue of about $6 billion increased 15.5% year-over-year and exceeded analysts’ average estimate of $5.81 billion. The company’s comparable store sales were up 7% in Q4.
The discount store operator delivered earnings of $1.82 per share, up about 39% year-over-year. Moreover, its EPS surpassed analysts’ average estimate of $1.66.
ROST raised its quarterly dividend by 10% to $0.3675 per share and hiked its stock repurchase plan by 11%.
Conservative Outlook
Ross Stores’ leadership expects its same-store sales to grow 2% to 3% in 2024, compared to a 5% increase registered in 2023. The company’s management stated that uncertainty in the macroeconomic and geopolitical landscapes presents challenges. Moreover, higher housing, food, and gasoline expenses are exerting pressure on the discretionary spending of low-to-moderate-income customers. Consequently, the company maintains a conservative stance when forecasting its business outlook for 2024.
Ross Stores expects Fiscal 2024 earnings per share to be in the range of $5.64 to $5.89, compared to analysts’ estimate of $5.40. As for Q1, ROST projects EPS to be $1.29 to $1.35, which is higher than analysts’ estimate of $1.26.
Is Ross Stores a Good Stock to Buy?
Ross Stores stock has gained over 34% in one year. Due to near-term macro headwinds, analysts maintain a cautiously optimistic outlook on ROST stock.
It has nine Buy and four Hold recommendations for a Moderate Buy consensus rating. Analysts’ average price target of $149.50 is roughly in line with its closing price on March 5.
