BofA Securities has shown confidence in Ross Stores, Inc. (NASDAQ: NASDAQ:ROST) by increasing their price target to $180 from $170 while reaffirming a Buy rating on the company's shares.
The adjustment follows Ross Stores' second-quarter earnings per share (EPS) of $1.59, surpassing both the analyst's estimate of $1.46 and the Visible Alpha consensus estimate of $1.49. The beat was attributed to higher sales and improved gross margins.
Comparable store sales (comps) for the quarter rose by 4%, outperforming the company's own guidance of 2-3%. This increase was propelled by a combination of higher customer traffic and larger purchase sizes.
Management at Ross Stores responded to the positive performance by raising their full-year 2024 (F24) EPS guidance by 3%, now expecting it to land between $6.00 and $6.13. This revision reflects the second-quarter results and anticipated operational efficiencies in the second half of the year.
For the third quarter, Ross Stores' management anticipates comparable store sales to be in the range of 2-3%, aligning with consensus expectations. Operating margin (OM) is forecasted to be between 10.9% and 11.2%.
The company also highlighted that for every percentage point increase in comparable store sales above their plan, they can leverage an additional 10-15 basis points due to expense initiatives.
In light of the second-quarter performance and the company's effective execution of its strategies, BofA Securities has revised its full-year 2024 and 2025 EPS estimates upwards by 3% and 1%, respectively, to $6.09 and $6.54.
In other recent news, Ross Stores, Inc. has seen significant financial growth, with the company's second-quarter earnings per share surging to $1.59, surpassing analyst estimates of $1.50.
The retail chain's revenue also experienced a 7% year-over-year increase, reaching $5.3 billion and exceeding expectations of $5.24 billion. In addition, comparable store sales saw a 4% uptick compared to the same period last year.
Evercore ISI has raised its price target for Ross Stores to $175 from the previous $165, maintaining an Outperform rating for the company. This adjustment follows Ross Stores' stronger-than-expected same-store sales (SSS) growth, which accelerated to 4%, surpassing both the analyst's expectations of 3% and the first quarter's 3% increase.
Looking ahead, Ross Stores has provided an optimistic forecast for the full fiscal year 2025, projecting earnings per share between $6.00 and $6.13, which surpasses the consensus analyst estimate of $6.01 per share. The company anticipates comparable sales growth of 2% to 3% for the third and fourth quarters.
InvestingPro Insights
As Ross Stores, Inc. (NASDAQ: ROST) continues to outperform with its impressive second-quarter earnings and raised full-year guidance, investors are taking note of its robust financial health and market position. According to recent data from InvestingPro, Ross Stores boasts a solid market capitalization of $50.88 billion, underscoring its significant presence in the retail sector. The company's Price/Earnings (P/E) ratio stands at 25.63, which, when paired with a PEG ratio of 0.81 for the last twelve months as of Q1 2025, suggests a favorable valuation in relation to near-term earnings growth.
InvestingPro Tips highlight that Ross Stores has not only raised its dividend for 3 consecutive years but has also maintained dividend payments for an impressive 31 consecutive years. This track record of consistent dividend growth is a testament to the company's financial resilience and commitment to shareholder returns. Additionally, Ross Stores' strong return over the last three months, with a price total return of 15.96%, reflects the company's positive momentum and investor confidence. For those seeking deeper analysis and more tips, InvestingPro offers a total of 14 tips on their platform for Ross Stores.
With Ross Stores trading near its 52-week high and at 96.62% of that peak, the company's stock performance aligns with BofA Securities' optimistic outlook and price target adjustment. The InvestingPro Fair Value estimate of $138.15, compared to the analyst target of $165, provides a range for investors to consider when evaluating the stock's potential upside. As Ross Stores prepares for its next earnings date on August 22, 2024, stakeholders will be watching closely to see if the company can sustain its growth trajectory and continue to leverage operational efficiencies.
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