Ross Stores (ROST) closed at $149.98 today, down by 1.34% from the previous day’s close. This decline was steeper than the S&P 500’s 0.28% drop, the Dow’s 0.52% fall, and the Nasdaq’s 0.08% dip. In the past month, shares of Ross Stores have risen by 1.86%. This is better than the Retail-Wholesale sector, which lost 3.47%, but not as good as the S&P 500, which gained 4.03%. In the upcoming earnings report, the company is expected to show earnings per share (EPS) at $1.4, a decline of 5.41% from last year. Meanwhile, revenue is anticipated to increase by 6.18% to $5.38 billion. Looking ahead, analysts forecast earnings of $6.2 per share and revenue of $22.12 billion, reflecting a drop of 1.9% for earnings but a rise of 4.67% for revenue compared to last year. Recent updates from analysts show changes that might indicate shifts in business trends and confidence in performance. These revisions affect stock price expectations, and currently, Zacks ranks Ross Stores as #3 (Hold). Ross Stores has a Forward P/E ratio of 24.51, which is higher than the industry average of 22.86. The company also has a PEG ratio of 2.91, compared to the Retail – Discount Stores industry’s average of 2.62. The Retail – Discount Stores industry ranks in the top 28% of all sectors, indicating positive outcomes. Ross Stores has recently lagged behind the broader market, drawing attention as the next earnings release approaches. The stock’s valuation may be high with a Forward P/E ratio of 24.51, which could expose it to risks if the upcoming report is not favorable. A key concern is the expectation of rising revenues but declining earnings per share. This could indicate compression of profit margins, a trend observed across the retail sector in 2025 due to ongoing supply chain costs. Recent retail sales data from September 2025 showed strong consumer spending, but labor costs also rose by 0.4%, which could challenge profitability. With analyst estimates being slightly revised downward, a neutral “Hold” rating is currently in effect. This uncertainty from analysts often leads to volatility around earnings announcements, suggesting potential for a significant price movement after the earnings release. For traders, this situation suggests that options strategies focusing on price movement could be effective. A long straddle or strangle, which involves buying both a call and a put option, might be advantageous if the stock moves significantly in either direction. Implied volatility is likely to increase as the earnings date nears, making early entry more cost-effective. On the bearish side, those concerned about margin issues could consider a bear put spread, which limits risk while positioning for a potential drop. A similar setup occurred before the company’s earnings miss in the second quarter of 2024, when margin guidance led to a significant one-day decline. This historical situation indicates that the market will likely react negatively to any signs of continued profit erosion. On the optimistic side, the strong revenue growth forecast highlights healthy consumer demand for off-price retail. Recent consumer confidence reports from early October 2025 show that shoppers are increasingly seeking value, which typically benefits Ross Stores. Traders who think the market is overly worried about costs might consider using bull call spreads to bet on a positive surprise driven by solid sales figures.

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