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Ross Stores Rising
Off-price apparel and home accessories retailer Ross Stores (Nasdaq: ROST) posted strong profit gains with healthy revenue increases for its second quarter. The company continues to do well with bargain shoppers in the weak economy.
IN PICTURES: What Is Your Risk Tolerance?
Net Income Rises, Share Buybacks Continue
Ross Stores' earnings per share (EPS) were $1.07, or $129.3 million, up from 82 cents a share, or $103.4 million, in the Q2 last year. Revenue was $1.91 billion, up 8 percent from last year's $1.77 billion. Merchandise categories were led by home goods, shoes and dresses, while inventories remained lean. Same-store sales grew by 4 percent.
For the first half of the year, EPS is $2.24, up from $1.55 in the same period last year. Revenue for the first six months has grown by 11 percent, while same-store sales have increased by 7 percent.
The company repurchased 3.6 million shares of its stock through the first half of the year for $193 million. The company still plans to spend $375 million this year for stock repurchases, with an additional $375 million next year.
Apparel Stores
Discount apparel retailer TJX Companies (NYSE: TJX), with its well-known TJ Maxx stores, has performed brilliantly in this off-center economy. It recently reported another strong quarter. The discount apparel companies may have a while yet to run. Men's Wearhouse (NYSE: MW) was cited as a strong cash creator - a good characteristic for companies to have in this slow-growth environment. Fellow clothing discounter Jos. A. Bank Clothiers (Nasdaq: JOSB), with its value-sale approach, has seen flush times in the poor economy and is a company with no debt. The value clothing business is not an easy one, though, as Casual Male Retail Group (Nasdaq: CMRG) found the going harder despite a profit increase. Its revenue fell slightly, and same-store sales had only an anemic rise. This underscores the impressiveness of the performances of TJX and Ross Stores.
Cautions Up Next
Ross Stores issued cautious guidance, especially on the economy, and noted that its comparisons for the second half of the year results will be demanding, given last year's strong numbers through the same period. Even with the uncertain economic and retail economy, the company predicted EPS of $4.18 to $4.27, which would be an 18 to 21 percent gain from last year's fiscal year.
Off-Price Star
Despite the potential continued economic weakness, Ross Stores continues to rise. There is much to like about this company with its marketplace position, earnings and revenue growth momentum, along with its relatively low debt. Even if value apparel buying slows down as the economy improves, Ross Stores still should perform well, though perhaps not as outstanding as right now. The stock trades at a reasonable 12.52 P/E ratio with its stock price in the middle of its 52-week range. It has strong growth possibilities, not just value. It's a bargain retailer that's also a bargain stock. (To learn more, see Analyzing Retail Stocks.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
IN PICTURES: What Is Your Risk Tolerance?
Net Income Rises, Share Buybacks Continue
Ross Stores' earnings per share (EPS) were $1.07, or $129.3 million, up from 82 cents a share, or $103.4 million, in the Q2 last year. Revenue was $1.91 billion, up 8 percent from last year's $1.77 billion. Merchandise categories were led by home goods, shoes and dresses, while inventories remained lean. Same-store sales grew by 4 percent.
For the first half of the year, EPS is $2.24, up from $1.55 in the same period last year. Revenue for the first six months has grown by 11 percent, while same-store sales have increased by 7 percent.
The company repurchased 3.6 million shares of its stock through the first half of the year for $193 million. The company still plans to spend $375 million this year for stock repurchases, with an additional $375 million next year.
Discount apparel retailer TJX Companies (NYSE: TJX), with its well-known TJ Maxx stores, has performed brilliantly in this off-center economy. It recently reported another strong quarter. The discount apparel companies may have a while yet to run. Men's Wearhouse (NYSE: MW) was cited as a strong cash creator - a good characteristic for companies to have in this slow-growth environment. Fellow clothing discounter Jos. A. Bank Clothiers (Nasdaq: JOSB), with its value-sale approach, has seen flush times in the poor economy and is a company with no debt. The value clothing business is not an easy one, though, as Casual Male Retail Group (Nasdaq: CMRG) found the going harder despite a profit increase. Its revenue fell slightly, and same-store sales had only an anemic rise. This underscores the impressiveness of the performances of TJX and Ross Stores.
Cautions Up Next
Ross Stores issued cautious guidance, especially on the economy, and noted that its comparisons for the second half of the year results will be demanding, given last year's strong numbers through the same period. Even with the uncertain economic and retail economy, the company predicted EPS of $4.18 to $4.27, which would be an 18 to 21 percent gain from last year's fiscal year.
Off-Price Star
Despite the potential continued economic weakness, Ross Stores continues to rise. There is much to like about this company with its marketplace position, earnings and revenue growth momentum, along with its relatively low debt. Even if value apparel buying slows down as the economy improves, Ross Stores still should perform well, though perhaps not as outstanding as right now. The stock trades at a reasonable 12.52 P/E ratio with its stock price in the middle of its 52-week range. It has strong growth possibilities, not just value. It's a bargain retailer that's also a bargain stock. (To learn more, see Analyzing Retail Stocks.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
by
Greg Sushinsky
Greg Sushinsky is a passionate independent investor, who has done his own research, analysis and investing for 20 years. One of his earliest investing memories was when he first saved and bought U.S. Savings Bonds with his own money as a small child. From there, he studied investing on his own and made small stock purchases as he grew as an investor.
Sushinsky still follows the markets, studies and reads widely in financial literature, and has written over 75 articles on investing. He is also a professional editor, whose work is published extensively in large-circulation magazines, digests and across the internet. In other pursuits, Sushinsky writes fiction and has a university degree in philosophy. To see more of Sushinsky's literary work, see http://writing.gregsushinsky.com/.
Sushinsky still follows the markets, studies and reads widely in financial literature, and has written over 75 articles on investing. He is also a professional editor, whose work is published extensively in large-circulation magazines, digests and across the internet. In other pursuits, Sushinsky writes fiction and has a university degree in philosophy. To see more of Sushinsky's literary work, see http://writing.gregsushinsky.com/.
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