UBS Believes Ross Stores’ 8% Earnings Growth Outlook Supports 27x P/E Multiple – But Says Optimism May Already Be Priced In

• Ross raised its full-year 2026 earnings guidance to between $8.61 and $8.77 per share.
• Citi called the quarter “outstanding” and said it sees further upside to 2026 earnings estimates.
• Barclays said Ross’ short-term execution advantage over competitors remains “wide.”

Shares of Ross Stores (ROST) were in the spotlight on Friday, following positive Wall Street action after a blowout second quarter that included a 10% growth in comparable-store sales.

At the time of writing, ROST shares were up 4%.

UBS Sees 8% Earnings CAGR

UBS expects Ross Stores to deliver an 8% compound annual growth rate (CAGR) in earnings over the next five years, supporting a roughly 27X price-to-earnings multiple. However, UBS cautioned that the stock’s current price already appears to reflect much of that optimism.

UBS raised Ross’ price target to $239 from $232 and kept a ‘Neutral’ rating, according to The Fly. The stock is already trading above the updated target.

Ross Posts Second Straight Double-Digit Comparable Store Sales Growth

Second-quarter (Q2) sales rose 13% to $6.3 billion, while comparable-store sales jumped 10%, the second consecutive double-digit quarter. Earnings came in at $2.66 per share. Both sales and earnings beat Wall Street’s estimates, according to Fiscal.ai data.

Ross said customer traffic drove the comparable-sales increase, with the retailer attracting new and returning customers, and existing shoppers visiting more frequently and spending more. Home goods and cosmetics were the strongest categories.

The company expects comparable sales to rise 6% to 7% in the third quarter and 4% to 5% in the fourth quarter. The retailer also raised its full-year 2026 earnings guidance to between $8.61 and $8.77 per share.

Citi Sees Further Upside To Ross’ Earnings Estimates

Citi called the quarter “outstanding” and said it sees further upside to 2026 earnings estimates. Truist raised its price target on Ross to $310 from $290 and maintained a ‘Buy’ rating. The firm said trends remained strong across merchandise categories and customer demographics. 

Barclays lifted its target to $298 from $260, kept an ‘Overweight’ rating, and added that comparable-store sales growth topped the 7.6% consensus estimate. It added that Ross’ short-term execution advantage over competitors remains “wide.”

Retail Flags $250 As Key Resistance

Retail sentiment surrounding ROST on Stocktwits turned ‘extremely bullish’ from ‘bullish’ a day earlier, amid a 450% increase in message volumes.

One user said if the stock breaks $250 and holds, it could see further surge. It is currently trading near $246.

Another user sees the stock climb up to $280 if it breaks past $250.

ROST stock has gained more than 27% so far this year.

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