Ross Stores (ROST) Stock Forecast & Price Target

Ross Stores has demonstrated consistent sales growth, with a noteworthy increase of 12.2% year-over-year in total sales for Q2, reaching $6.64 billion, significantly exceeding prior consensus estimates. The company's guidance for fiscal year 2026 indicates continued momentum, with expected comparable store sales growth of 7%-8% and total sales growth projected between 6%-8%. Additionally, the planned addition of 17 new stores further strengthens the company's expansion strategy, positioning Ross Stores favorably in the competitive retail landscape.

Ross Stores has experienced a decline in its operating margin, with a 30 basis point year-over-year decrease to 11.6% in 3Q25, despite outperforming guidance and consensus expectations. Expected operating margins for Q1 are projected to slightly decrease to between 11.8%-12.1%, influenced by increasing distribution center costs, unfavorable packaway expenses, and higher incentive costs, which are anticipated to negate merchandise margin expansion. Additionally, gross margin is forecasted to contract by 10 basis points to 26.4%, alongside further SG&A deleverage of 20 basis points to 14.4%, indicating potential challenges in cost management and overall profitability.