Yahoo Finance How Does Ross Stores Plan to Reward Its Investors?
Ross Stores Stays Cautious despite Strong Fiscal 4Q15 Results
Stock price up on fiscal 4Q15 results
Ross Stores’ (ROST) stock price rose by 2.7% on March 2, 2016, to $57.74, following its strong results for fiscal 4Q15 ended January 30, 2016. The company reported its fiscal 4Q15 results after the close of financial markets on March 1. We discussed the company’s fiscal 4Q15 earnings and sales in Parts One and Two of this series.
As of March 2, Ross Stores’ stock has risen by 6.2% on a year-to-date basis. The stock prices of peers TJX Companies (TJX), Burlington Stores (BURL), and Nordstrom (JWN) have risen by 6.5%, 31.4%, and 5.2%, respectively, since the start of 2016.
The Consumer Discretionary Select Sector SPDR ETF (XLY) and the S&P 500 Index have fallen by 0.6% and 1.3%, respectively, on a year-to-date basis. Ross Stores constitutes 1% of XLY.
Increase in dividends
On March 1, Ross Stores announced that its board had approved a 15% rise in its quarterly dividend to $0.14 per share. The raised quarterly dividend will be payable on March 31, 2016, to stockholders of record as of March 14, 2016. Ross Stores has raised its dividend annually since its inception in 1994.
As of March 2, Ross Stores’ current dividend yield is 0.8%. The current dividend yield of TJX Companies (TJX) is 1.1%. Burlington Stores currently does not pay any dividends.
Aside from dividends, Ross Stores also rewards its shareholders through stock repurchases. Stock repurchases enhance earnings per share by reducing the number of outstanding shares. In fiscal 2015, Ross Stores repurchased 13.7 million shares of common stock for $700 million under its two-year $1.4 billion share repurchase program announced in February 2015. The company plans to repurchase shares worth $700 million remaining under this program in fiscal 2016.
Consensus “buy” rating
As of March 2, 2016, 17 out of 30 analysts covering Ross Stores have “buy” recommendations, and 13 analysts have “hold” recommendations on the stock. None of the analysts have “sell” recommendations. The consensus “buy” rating is supported by the consistent performance of the strong off-price business model of Ross Stores.
The 12-month price target for Ross Stores’ stock is $60.39. This estimate reflects a 4.6% upside potential from the company’s stock price on March 2. We’ll discuss the company’s fiscal 2016 outlook in the concluding part of this series.
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