While the S&P 500 is up 19.5% since May 2025, Ross Stores (currently trading at $160.23 per share) has lagged behind, posting a return of 12%. This may have investors wondering how to approach the situation.
Given the relatively weaker price action, is now a good time to buy ROST? Or are investors better off allocating their money elsewhere?
Why Does ROST Stock Spark Debate?
Selling excess inventory or overstocked items from other retailers, Ross Stores (NASDAQ: ROST) is an off-price concept that sells apparel and other goods at prices much lower than department stores.
Two Positive Attributes:
1. Store Growth Signals an Offensive Strategy
A retailer’s store count often determines how much revenue it can generate.
Ross Stores operated 2,233 locations in the latest quarter. It has opened new stores at a rapid clip over the last two years, averaging 4.1% annual growth, much faster than the broader consumer retail sector.
When a retailer opens new stores, it usually means it’s investing for growth because demand is greater than supply, especially in areas where consumers may not have a store within reasonable driving distance.
2. Solid Same-Store Sales Suggest Increasing Demand
Same-store sales is a key performance indicator used to measure organic growth at brick-and-mortar shops for at least a year.
Ross Stores’s demand has been healthy for a retailer over the last two years. On average, the company has grown its same-store sales by a robust 3.1% per year.
One Reason to be Careful:
Long-Term Revenue Growth Disappoints
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Unfortunately, Ross Stores’s 5.7% annualized revenue growth over the last six years was tepid. This wasn’t a great result compared to the rest of the consumer retail sector, but there are still things to like about Ross Stores.
Final Judgment
Ross Stores has huge potential even though it has some open questions. With its shares trailing the market in recent months, the stock trades at 24.3× forward P/E (or $160.23 per share). Is now a good time to initiate a position? See for yourself in our in-depth research report, it’s free for active Edge members.
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