Can Ross Stores Continue to Deliver Double-Digit Returns?
3Q15 Earnings Preview: Can Ross Stores Continue its Growth Streak?
High shareholder return
Over the past year, Ross Stores (ROST) has delivered a total shareholder return of 19.5%. This return is higher compared to its peers TJX Companies (TJX) and Burlington Stores (BURL), which have delivered one-year total returns of 10.5% and 4.2%, respectively.
The S&P 500 Durables and Apparel Index has generated a one-year return of 7.7%. Ross Stores’ return is higher than the S&P 500 Index, which has generated a one-year return of 3.9%.
Dividend and share buybacks
Ross Stores (ROST) declared a dividend of $0.12 in 2Q15, up 17.5% from 2Q14. As of November 11, 2015, Ross Stores’ current dividend yield is 0.9%, lower than TJX Companies’ current dividend yield of 1.1%.
Ross Stores repurchased 6.9 million shares of common stock for $351.5 million during the first half of fiscal 2015 ended August 1, 2015. The company expects to buy back an aggregate of $700 million in stock in fiscal 2015. This two-year $1.4 billion stock repurchase program for 2015–2016 was approved by the board in February 2015. Prior to this, the company exhausted its two-year $1.1 billion share repurchase program in 2014.
Stock price appreciation
As of November 11, 2015, Ross Stores’ stock price has appreciated by 3.5% since the start of this year. However, the company’s stock has declined by 12.2% since the announcement of its 2Q15 results on August 20. As discussed in Part 2 of this series, the company issued a subdued sales outlook despite a strong performance in 1H15.
The stock price of TJX Companies (TJX) has appreciated by 1.6% since the start of the year while Burlington Stores’ (BURL) stock price has fallen by 9.8%.
Ross Stores makes up 0.1% of the portfolio holdings of the SPDR S&P 500 ETF (SPY) and 0.7% of the holdings of the Vanguard Consumer Discretionary ETF (VCR).
Ross Stores expects the EPS (earnings per share) for the full-year fiscal 2015 ending January 31, 2016, to fall in the $2.40–$2.45 range, up 9%–11% compared to fiscal 2014. For a business overview of the company, please read Ross Stores: The Must-Know Growth Story of an Off-Price Retailer.
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