Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!

Hurricane Harvey May Have Been A Tailwind For Ross Stores

Courtesy of Benzinga.

Hurricane Harvey May Have Been A Tailwind For Ross Stores

This year’s extreme hurricane season proved disruptive to southern brick-and-mortar businesses, damaging some locations and forcing temporary closures of others.

With about 7 percent of its stores in Harvey-impacted areas, Ross Stores, Inc. (NASDAQ: ROST) isn’t immune to injury ━ but it should turn out all right in the long run. In fact, JPMorgan expects the discount retailer to post storm-related gains driven by full-price distributors’ failure to clear inventory.

“ROST cited that stores historically experience a post-hurricane bump with disruption in the broader retail supply chain resulting in order cancellations/excess product, which provides compelling buying opportunities for the off-price business model over time,” analysts Matthew Boss and Steven Zaccone wrote in a recent note.

The analysts upgraded the stock to Overweight with a $74 price target.

Other Catalysts

JPMorgan foresees continued market share gains from industrywide consolidation of brick-and-mortar stores and Ross’ position to capitalize on changing fashion trends. The firm boasts a diverse vendor base with no single brand contributing more than 3 percent of sales.

At the same time, Ross sees a favorable field of competition and registers no threat from the imposing Amazon.com, Inc. (NASDAQ: AMZN), which leadership considers more comparable to full-price department stores.

“ROST’s pricing proposition stands 20 to 60 percent below both AMZN and department stores on average with its constantly changing mix and zero private label exposure providing assortment flexibility,” Boss and Zaccone wrote.

JPMorgan’s positive thesis also accounts for:

  • Store expansion from 1,598 stores in 37 states to 2,500 stores nationwide.
  • Guidance for multi-year double-digit earnings-per-share growth driven by inventory reduction, payroll management and shrink improvement.
  • And an expected $2.3 billion in excess cash available to shareholders by 2019 based on execution of a buyback plan and dividend payout.

At the time of writing, Ross was trading up 3 percent.

Related Links:

TJX Companies Continues Strength In Midst Of Retail’s Rough Patch

Physical Retail Isn’t Dying: Here’s How To Play It

______

Image Credit: By Nicholas Eckhart from Elyria, Ohio, United States of America – Ross Dress For Less in Pittsburgh, Pennsylvania, CC BY 2.0, via Wikimedia Commons

Latest Ratings for ROST

Date Firm Action From To
Sep 2017 JP Morgan Upgrades Neutral Overweight
Sep 2017 Bernstein Initiates Coverage On Market Perform Outperform
Aug 2017 MKM Partners Maintains Buy

View More Analyst Ratings for ROST


View the Latest Analyst Ratings

Posted-In: Analyst Color Long Ideas News Upgrades Price Target Analyst Ratings Movers Trading Ideas Best of Benzinga


Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend!





You must be logged in to make a comment.
You can sign up for a membership or get a FREE Daily News membership or log in

Sign up today for an exclusive discount along with our 30-day GUARANTEE — Love us or leave, with your money back! Click here to become a part of our growing community and learn how to stop gambling with your investments. We will teach you to BE THE HOUSE — Not the Gambler!

Click here to see some testimonials from our members!