Ross Stores, a Zacks Rank #1 (Strong Buy), has been one of the standout performers in retail this year, and for good reason.
The nation’s largest off-price apparel and home-fashion retailer is firing on all cylinders, posting the strongest comparable-sales quarter in its four-decade history while value-seeking consumers continue to flock to its treasure-hunt shopping model. The stock’s recent upgrade reflects a powerful upward trend in earnings estimates — one of the most reliable forces driving share prices higher.
Shares have broken out to new highs on strong volume and continue to display impressive relative strength, having climbed roughly 27% year-to-date and outpacing the broader Retail and Wholesale sector. This is precisely the kind of price action that tends to accompany a stock with improving fundamentals and rising estimates.
Ross Stores is part of the Zacks Retail – Discount Stores industry group, which currently ranks in the top 11% out of approximately 250 Zacks Ranked Industries. Because it is ranked in the top half of all Zacks Ranked Industries, we expect this group to outperform the market over the next 3 to 6 months, just as it has so far this year.
The industry’s strength has been driven by a positive earnings outlook for its constituent companies in aggregate, a powerful foundation that should lead to higher prices in the future.
Image Source: Zacks Investment Research
Historical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1.
It’s no secret that investing in stocks that are part of leading industry groups can give us a leg up relative to the market. By focusing on leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our stock-picking success.
Company Description
Ross Stores operates the largest off-price retail apparel and home-fashion business in the United States, selling first-quality, in-season, name-brand and designer merchandise at meaningful discounts to department and specialty stores.
The company runs two banners — Ross Dress for Less, its flagship chain of roughly 2,300 locations, and dd’s DISCOUNTS, which targets more moderate-income households. Its opportunistic buying model, which capitalizes on manufacturer overruns and packaway inventory, allows Ross to deliver the bargains that keep customers coming back.
The value proposition has rarely been more relevant. As shoppers across income levels hunt for ways to stretch their budgets, Ross’s low-price, no-frills format has captured a broadening customer base. Under CEO Jim Conroy, the company has sharpened its marketing, merchandising, and in-store experience, and it continues to expand aggressively — opening 17 new stores in the most recent quarter, with roughly 110 openings planned for fiscal 2026 and a long-term runway toward 2,900 Ross and 700 dd’s DISCOUNTS locations from today’s base.
Earnings Trends and Future Estimates
Ross most recently delivered a blowout first-quarter report. Adjusted earnings of $2.02 per share topped the Zacks Consensus Estimate of $1.70 by 18.9% and surged 37% from the prior-year period, while revenues of $6.01 billion jumped 21% year over year.
The headline figure was a 17% increase in comparable-store sales — the strongest same-store performance in the company’s 40-year history — accompanied by 120 basis points of operating-margin expansion to 13.4% on better merchandise margins and tighter cost control. It was a clean beat across every line that matters.
Crucially, management responded by raising its full-year outlook, now guiding to comparable-sales growth of 6-7% and earnings per share of $7.50 to $7.74, representing growth of roughly 13-17% over the prior year’s $6.61.
Analysts have followed suit: the Zacks Consensus Estimate for the current fiscal year has climbed about 5.8% over the past 60 days, now sitting near $7.74. That upward revision activity placed Ross in the top 5% of all Zacks-covered stocks on estimate revisions — the engine behind its Strong Buy rating. The company also returned cash aggressively, repurchasing $318.7 million of stock and paying down $500 million in senior notes during the quarter.
Image Source: Zacks Investment Research
Let’s Get Technical
Ross Stores ROST has been in a well-defined uptrend, and the latest earnings reaction only reinforced it. This is the kind of stock we want to include in our portfolio — one that is trending well and receiving positive earnings estimate revisions.
Image Source: StockCharts
Notice how shares reside above upward-sloping 50-day (blue line) and 200-day (red line) moving averages, a hallmark of a healthy bull trend, with the stock recently notching fresh highs. Momentum has steadily built throughout 2026. With improving fundamentals and a constructive technical picture, ROST appears positioned to continue its outperformance.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. As we know, Ross Stores has recently witnessed sharp upward revisions. As long as this trend remains intact (and ROST continues to deliver earnings beats), the stock will likely continue its bullish run.
Bottom Line
Backed by a leading industry group and a powerful history of earnings beats, it’s not difficult to see why this off-price juggernaut is a compelling investment. Currently, ROST sports a Zacks Rank #1 (Strong Buy), driven by robust upward estimate momentum.
The combination of record comparable-sales growth, expanding margins, an aggressive store-opening runway, and a deeply resonant value proposition provides a tailwind for the share price. Robust fundamentals combined with a strengthening technical trend certainly justify adding shares to the mix. If you haven’t already done so, be sure to put Ross Stores on your watchlist.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
