Ross Stores Shares Approach Earnings Report at Peak Valuation

With its stock trading at unprecedented levels, Ross Stores finds itself in the spotlight as it nears the release of its quarterly financial results. The off-price retailer's shares recently achieved a fresh 52-week peak of $162.23, prompting market participants to question whether further appreciation is possible ahead of the November 20 earnings announcement.

Market experts across multiple institutions have expressed bullish sentiment toward the retailer. BofA Securities maintains its favorable "Buy" recommendation, suggesting the company could significantly surpass its own conservative sales projections. Rather than anticipating low single-digit growth, the firm sees potential for mid to high single-digit revenue increases during the crucial holiday shopping period.

This positive outlook is echoed throughout the investment community:
- TD Cowen has raised its price target to $162
- Citigroup identifies potential upside to $171 per share
- Wells Fargo projects a more ambitious $180 valuation
- Erste Group initiated coverage with a "Buy" rating

The sole dissenting voice comes from BTIG, which maintains a "Neutral" stance based on concerns about the stock's already elevated valuation.

Strategic Expansion Underway

The company's growth strategy continues through physical expansion, with 40 new locations launched during September and October alone. This rollout included 36 Ross Dress for Less stores and four dd's DISCOUNTS outlets. Throughout fiscal 2025, the retailer has added 90 new stores to its network, bringing its total footprint to 2,273 locations.

Should investors sell immediately? Or is it worth buying Ross Stores?

Management has articulated an aggressive long-term expansion plan targeting at least 2,900 Ross Dress for Less and 700 dd's DISCOUNTS stores. This growth initiative resonates particularly well with cost-conscious consumers who have become increasingly price-sensitive in the current economic environment.

Earnings Release Looms With Mixed Expectations

As the November 20 earnings date approaches, anticipation builds around whether the company can continue its pattern of exceeding expectations. Zacks Equity Research indicates positive momentum with an Earnings ESP of +2.58%, suggesting potential for another earnings beat.

However, challenges remain. Gross margins are projected to face pressure in the third quarter, potentially declining by approximately 60 basis points due to wage inflation and inventory carrying costs. Consensus estimates project earnings per share of $1.38, compared to $1.48 in the prior-year period, while revenue is expected to increase 6.44% to $5.4 billion.

The central question for investors remains whether Ross Stores shares can sustain their record-breaking trajectory or if the current valuation already reflects the company's growth prospects. The upcoming earnings report will provide crucial insight into the retailer's ability to maintain its momentum.