Earnings results often indicate what direction a company will take in the months ahead. With Q4 behind us, let’s have a look at Ross Stores (NASDAQ:ROST) and its peers.
Discount retailers understand that many shoppers love a good deal, and they focus on providing excellent value to shoppers by selling general merchandise at major discounts. They can do this because of unique purchasing, procurement, and pricing strategies that involve scouring the market for trendy goods or buying excess inventory from manufacturers and other retailers. They then turn around and sell these snacks, paper towels, toys, clothes, and myriad other products at highly enticing prices. Despite the unique draw and lure of discounts, these discount retailers must also contend with the secular headwinds of online shopping and challenged retail foot traffic in places like suburban strip malls.
The 5 discount retailer stocks we track reported a slower Q4. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 2.2% below.
Thankfully, share prices of the companies have been resilient as they are up 6.5% on average since the latest earnings results.
Weakest Q4: Ross Stores (NASDAQ:ROST)
Selling excess inventory or overstocked items from other retailers, Ross Stores (NASDAQ:ROST) is an off-price concept that sells apparel and other goods at prices much lower than department stores.
Ross Stores reported revenues of $5.91 billion, down 1.8% year on year. This print was in line with analysts’ expectations, but overall, it was a slower quarter for the company with full-year EPS guidance missing analysts’ expectations significantly and EPS guidance for next quarter missing analysts’ expectations.
Ross Stores delivered the slowest revenue growth of the whole group. Interestingly, the stock is up 4% since reporting and currently trades at $141.47.
Is now the time to buy Ross Stores? Access our full analysis of the earnings results here, it’s free.
Best Q4: Five Below (NASDAQ:FIVE)
Often facilitating a treasure hunt shopping experience, Five Below (NASDAQ:FIVE) is an American discount retailer that sells a variety of products from mobile phone cases to candy to sports equipment for largely $5 or less.
Five Below reported revenues of $1.39 billion, up 4% year on year, outperforming analysts’ expectations by 1%. The business performed better than its peers, but it was unfortunately a mixed quarter with EPS guidance for next quarter exceeding analysts’ expectations but full-year EPS guidance missing analysts’ expectations.
Five Below pulled off the highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 12.3% since reporting. It currently trades at $84.88.
Is now the time to buy Five Below? Access our full analysis of the earnings results here, it’s free.
Burlington (NYSE:BURL)
Founded in 1972 as a discount coat and outerwear retailer, Burlington Stores (NYSE:BURL) is now an off-price retailer that has broadened into general apparel, footwear, and home goods.
Burlington reported revenues of $3.28 billion, up 4.8% year on year, exceeding analysts’ expectations by 0.9%. Still, it was a slower quarter as it posted EPS guidance for next quarter missing analysts’ expectations significantly and full-year EPS guidance missing analysts’ expectations.
The stock is flat since the results and currently trades at $237.04.
Read our full analysis of Burlington’s results here.
TJX (NYSE:TJX)
Initially based on a strategy of buying excess inventory from manufacturers or other retailers, TJX (NYSE:TJX) is an off-price retailer that sells brand-name apparel and other goods at prices much lower than department stores.
TJX reported revenues of $16.35 billion, flat year on year. This print beat analysts’ expectations by 1%. However, it was a slower quarter as it recorded EPS guidance for next quarter missing analysts’ expectations significantly and full-year EPS guidance missing analysts’ expectations.
TJX achieved the biggest analyst estimates beat among its peers. The stock is up 5.1% since reporting and currently trades at $128.94.
Read our full, actionable report on TJX here, it’s free.
Ollie's (NASDAQ:OLLI)
Often located in suburban or semi-rural shopping centers, Ollie’s Bargain Outlet (NASDAQ:OLLI) is a discount retailer that acquires excess inventory then sells at meaningful discounts.
Ollie's reported revenues of $667.1 million, up 2.8% year on year. This result missed analysts’ expectations by 1.2%. More broadly, it was a mixed quarter as it also produced an impressive beat of analysts’ gross margin estimates but full-year EPS guidance missing analysts’ expectations.
Ollie's had the weakest performance against analyst estimates and weakest full-year guidance update among its peers. The stock is up 11.6% since reporting and currently trades at $110.52.
Read our full, actionable report on Ollie's here, it’s free.
Market Update
In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.
Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Growth Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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