Ross Stores (ROST) Up After Five Straight Reports: Priced In?
Ross Stores rose after each of its last five earnings reports: +1.1% in August 2025, then +8.4%, +8.0%, +8.1% and, on August 20, +4.4%. Before that streak came a day of -9.8% in May 2025. A run like that tells me two things at once. The company has beaten a bar that analysts kept raising, and the shares now cost noticeably more than when the run began. Around $226.61 as I write this, the stock trades at 27.4 times trailing earnings of $8.27 per share.
My stance: Ross is an excellent operator whose latest good news is mostly in the price, and I would want either a pullback or proof that growth holds near double digits before calling it attractive. The rest of this piece lays out why.
A retailer that stopped drifting
Four quarters of sluggish growth came first. Quarterly sales rose 3.0%, then fell 1.8%, then rose 2.6% and 4.6%. The four reported quarters since then grew 10.4%, 12.2%, 20.6% and 13.3%, according to the quarterly figures in my data set, which trace back to the company’s 10-Q filings on SEC EDGAR. The most recent quarter, ending July 31, brought in $6.3 billion of sales.
That is a different business from the one that looked flat in 2025, and the net income line moved even faster. Quarterly net income grew 35.6% in the quarter ending May 1 and 67.6% in the one ending July 31, to about $851 million. That last figure works out to a net margin of roughly 13.6% on $6.26 billion of sales, while the full-year margin is 9%. I cannot tell from the data whether a one-time item helped that quarter. I would read the 10-Q line by line before treating $851 million as a run rate. Ross Stores’ financials page has the quarter-by-quarter detail.
Ross sells brand-name clothing, shoes and home goods at discounts at its own stores. Home Accents and Bed and Bath is the largest category at 24% of sales, Ladies follows at 23%, and Men’s is 16%. Accessories, lingerie, jewelry and cosmetics add 15%, shoes 13% and children’s 9%. No category dominates, which is one reason the business bounces less than a fashion retailer would.
Morningstar’s analysts call the moat wide, built on price-led sourcing and vendor relationships, with a 10-year average return on invested capital of 40%. I take that as a fair description of the quality. Quality and price are still separate questions.
What the market pays for that
The trailing P/E of 27.4 sits above the five-year average of 25.0, and the peer group average in my data is 18.4. Against its own history, the stock is at the 76th percentile. Price to sales tells a similar story with a bigger gap: 3.0 today against an average of 2.2, near the top of its five-year range.
The stock is 11.7% below its 52-week high of $257 and 59% above the low of $143. Anyone who bought a year ago is sitting on a large gain, and the market has already paid the first movers. I looked at where else the retail group trades in my ranking of five retail stocks, and Ross is at the expensive end of off-price against what I would expect for the growth on offer.
A multiple of 27 against a group at 18 is a 50% premium. That premium can be earned. Ross has a long record of excess returns, and a cost-led model tends to hold up when consumers trade down. But a premium is a claim about the future, and this one rests on growth that has to stay well above the historical 3% to 5%.
The forward number does not add up
Forward P/E is 27.4, the same as the trailing multiple. That implies analysts expect next year’s EPS to equal the last four quarters, about $8.27, even though net income in the latest quarter rose 68%. Either estimates have not caught up with the last two quarters, or analysts expect the recent pace to fade. I cannot tell which from the numbers I have.
I lean toward the second reading, for a simple reason. Two-year growth is the fairer way to view a retailer that grew 4.6% in the base quarter. Multiply the base growth by the latest and the quarter ending July 31 is up about 18.5% over two years. The one ending May 1 was up about 23.7%. The two-year pace already slowed by five points between those quarters.
The next two quarters have tougher comparisons, because they lap growth of 10.4% and 12.2%. If the two-year pace simply held at 18.5%, growth in the quarter ending in October would be about 7.3%. If it slipped a little further, growth would land in the mid-single digits. Nothing about that is bad for a big retailer. It is a lot slower than the 13% that investors have just seen.
What the arithmetic allows
The table below runs trailing EPS of $8.27 through a few scenarios. The point is to see how much the multiple, and not only the earnings, decides the outcome.
| Scenario | EPS | Multiple | Implied price | Versus about $227 |
|---|---|---|---|---|
| Growth holds near 10% | $9.10 | 25x | $227 | about 0% |
| Growth fades to 5% | $8.68 | 25x | $217 | about -4% |
| Growth fades, multiple to peers | $8.68 | 18.4x | $160 | about -30% |
| Beat and keep premium | $9.10 | 27.4x | $249 | about +10% |
The first row is the one that struck me. Ten percent EPS growth at the five-year average multiple returns roughly today’s price. So a holder who thinks Ross keeps growing 10% and never gets a cheaper multiple earns about nothing over a year, before the dividend. The upside cases need the premium to stay or expand, and the downside case is a return to the peer multiple. I do not expect the full 18.4, but the row shows how much of today’s price is the premium.
Analysts, insiders and the dividend
Of the 17 analysts covering Ross, 71% rate it Buy and the rest Hold. The average target is $271, 20% above the price, in a range from $234 to $298. The lowest target is only 3% above today’s price, which means the most cautious analyst has already been overtaken by the stock. Targets follow prices, and I treat them as a sentiment reading and not as a forecast.
One item in the recent news is worth stating without over-reading it: a Form 144 filing showed an officer proposing to sell about $11.3 million of stock in mid-September. Executives sell for tax, diversification and plenty of reasons unrelated to outlook, and I have no basis for guessing at this one. Insider selling is a data point, not a verdict.
Ross’s quarterly dividend is $0.445, up from $0.405 in the prior year’s December payment, an increase of about 10%. That comes to $1.78 a year, a yield near 0.75% and a payout of about 21% of trailing EPS. The dividend is safe and small. Nobody buys this stock for the income, so it does little to cushion a multiple that compresses.
A low payout ratio also means the dividend is not the thing that will save the stock if growth slips. Ross has room to raise the payment again next December without straining the balance sheet, and it likely will, but a percentage point or two on a sub-1% yield does not move the total return much either way. The buyback matters more here than the dividend does, because it is the lever that turns a flat earnings year into a slightly better EPS number, and it is also the lever that gets used less aggressively if the stock stays expensive. Watching the pace of repurchases each quarter is a cheap way to see whether management thinks the shares are still worth buying at this multiple.
The comparison that matters
Ross’s next report is the test, and the number I would watch first is sales growth against the 10.4% comparison. Anything at or above 10% would tell me the acceleration is not just an easy-comparison effect, and I would then be more comfortable with 27 times. Growth of 7% or below is what a constant two-year pace would produce, and I would expect the shares to react like a stock that was priced for more. The average absolute earnings-day move is 7.2%, and my data’s predicted volatility for the last report was about 18%, which is a measure of how large the swing could be, not a call on direction.
There is a case I should give its due. Ross could keep growing at a double-digit clip for several more quarters, since the company has room to open stores and off-price has taken share while department stores shrink. If that happens, 27 times earnings is not expensive, and waiting for a pullback could cost more than paying up. The way I would be wrong is a print of 12% growth with margins holding, which is exactly what the last two quarters look like. I put Ross next to the rest of discount retail in my ranking of the sector, and the same question applies there: is the growth rate the report just gave you, or the two-year average underneath it.
A price for patience
My conclusion is narrow. I like the company and would not argue with someone who owns it. I would not add at $226.61 on the strength of a streak, because the streak is the reason the price is here. A better entry is either a fall toward $200 or a quarter that proves the two-year pace holds above 18%.
Analysis and opinion only, not investment advice. Figures come from Ross Stores’ filings on SEC EDGAR and its company site; valuation multiples and market data are approximate and were checked on September 22, 2026.
Sources: Dividends (SEC Investor.gov glossary) (https://www.investor.gov/introduction-investing/investing-basics/glossary/dividend) · Dividends tax topic (IRS) (https://www.irs.gov/taxtopics/tc404)