By Teresa Rivas

Off-price retailers like Ross Stores thrive on the treasure hunt model, where shoppers keep coming back to see what's new. Turns out Ross shares were the treasure all along.

Ross was up more than 6% in trading Friday, after the retailer delivered what one analyst called "a remarkable first-quarter beat." The company reported earnings of $2.02 a share, on revenue that rose 20.6% year over year to $6.01 billion. Analysts were looking for EPS of $1.73 and revenue of $5.64 billion. Comparable sales rose an impressive 17% in the quarter, compared with flat sales last year.

Looking ahead, Ross raised its guidance. It expects to earn between $1.85 and $1.93 for the first quarter and $7.50 to $7.74 for the full year, both ahead of consensus expectations. For the full year it sees same-store sales growth of 6% to 7%, on top of last year's 5% gain.

Those numbers explain the stock's reaction, even with Ross shares up more than 28% year to date.

William Blair analyst Dylan Carden, quoted above, believes the report shows Ross is "just getting started." Worries about upcoming tougher comparisons are misplaced given what he suspects are sustainable trends like "acceleration in new customer growth, reaching into younger and in our view likely higher and lower income brackets."

Telsey Advisory Group's Dana Telsey likewise isn't concerned about Ross's ability to keep delivering, as the company is "planning increased investments in store growth that can further support top-line gains longer-term, while maintaining a healthy margin profile and a well-controlled cost structure. Furthermore, with momentum in the business, Ross continues to deliver shareholder returns through its dividend and two-year share repurchase program that can further support share upside."

Ross is up nearly 12% since Barron's recommended the shares in mid-March, a period when peers tracked by the State Street SPDR S&P Retail exchange-traded fund are up less than 3%, amid ongoing fears about how consumers will handle high gas prices.

The spike in energy is a concern for Ross, like other retailers, but Truist analyst Joseph Civello notes that this can be somewhat helpful to Ross as "incremental macro pressures tend to drive more customers to the off-price channel." He thinks the shares should trade to $290, compared with $270 before the report.

Likewise, Jefferies analyst Corey Tarlowe called Ross a "clear winner" following the "blowout" quarter, leading him to reiterate the stock as a top pick and raise his price target by $20, to $265.

The shares trade for 29.6 times this fiscal year's earnings and less than 27 times the next, which isn't that far above the five-year average around 25 times. Its valuation looks more reasonable too considering that consensus calls for EPS to jump more than 18% this year and over 10% next year, figures that will likely climb further as analysts incorporate the latest quarterly report and forecasts.

No wonder investors don't mind splurging on the shares.

Write to Teresa Rivas at teresa.rivas@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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May 22, 2026 13:09 ET (17:09 GMT)

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