Ross Stores (ROST) Stock Tumbles on Disappointing Retail Data

Ross Stores (ROST) stock is declining in afternoon trading on Friday, amid weaker-than-expected retail data for October.
By Rachel Graf ,

NEW YORK (TheStreet) -- Ross Stores (ROST) - Get Report stock is falling by 5.65% to $45.39 on heavy volume in afternoon trading on Friday, as retail sales increased less than expected last month.

Based in Dublin, CA, Ross Stores is an off-price retailer of name brand and designer apparel, accessories, footwear, and home fashions.

Retail sales climbed by 0.1% in October, compared to expectations for a 0.3% rise, according to Reuters.

Excluding certain items such as automobiles and food services, retail sales increased 0.2% in October, compared to 0.1% in September, Reuters adds.

"Even though we continue to expect personal spending to remain a key source of support for economic activity this quarter, this report does point to a very weak start to the quarter," Millan Mulraine, deputy chief economist at TD Securities, told Reuters. 

Additionally, Ross Stores will report its 2015 third quarter financial results on Thursday after the market close. Fellow retailers Macy's(M) andNordstrom(JWN)reported disappointing third quarter earnings this week. 

About 5.78 million shares of Ross Stores have been traded so far today, more than double the company's average trading volume of about 2.58 million shares a day.

Separately, TheStreet Ratings team rates ROSS STORES INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

We rate ROSS STORES INC (ROST) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, growth in earnings per share, increase in net income, revenue growth and notable return on equity. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 27.63% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, ROST should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • ROSS STORES INC has improved earnings per share by 10.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, ROSS STORES INC increased its bottom line by earning $2.21 versus $1.94 in the prior year. This year, the market expects an improvement in earnings ($2.45 versus $2.21).
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Specialty Retail industry average. The net income increased by 8.0% when compared to the same quarter one year prior, going from $239.56 million to $258.64 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.1%. Since the same quarter one year prior, revenues slightly increased by 8.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Specialty Retail industry and the overall market, ROSS STORES INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • You can view the full analysis from the report here: ROST

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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