Ross Stores Inc "Solid 1Q Report, but Not Thesis Changing; Raise PT and..."

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Ross Stores Inc "Solid 1Q Report, but Not Thesis Changing; Raise PT and..."

of spend could drive incremental traffic, in our

From To % ch Cons.

view. At the same time, the way ROST has accelerated its comp despite its large size is

Q1E 1.80 2.02 13 1.73

unprecedented in the off-price industry. This make it hard to have high conviction ROST

Q2E 1.81 1.89 4 1.79

can "comp the comp" when starts lapping tough compares in 4Q27.

Q3E 1.71 1.67 -2 1.75

Q4E 2.12 2.11 -1 2.17

We raise our FY26-28 EPS estimates ~2-3%: 01/27E 7.50 7.70 3 7.43

ROST beat our 1Q26 EPS forecast by 23c. This drives the majority of the 3% increase in 01/28E 8.00 8.20 2 8.18

our FY26 EPS estimate. Our 2H26 topline outlook remains largely unchanged. We 01/29E 8.40 8.60 2 9.06

expect slightly higher gross margins for the full year, primarily driven by an improved

Jay Sole

outlook on ROST’s merchandise margins. We also believe ROST's tariff costs are reduced

Analyst

as a result of the recent changes in the US tariff policy. At the same time, this is partially jay.sole@ubs.com

offset by higher anticipated freight and store costs. Together, our FY26 operating margin +1-212-713 3559

forecast increases ~20 bps. Our FY27-FY28 EPSe rise ~2% given a higher FY26E base.

Mauricio Serna, CFA

Please see more detail inside this report. Analyst

mauricio.serna@ubs.com

We raise our price target 2% to $232 and stay Neutral: +1-212-713 9028

Our $232 PT is based on ~27x our FY28 EPSe of $8.60. The entirety of the PT change is Natalie Koltermann

due to the 2% increase in our FY28 EPSe. Our multiples analysis indicates a $208 PT puts Associate Analyst

ROST's valuation in-line with peers on P/E, P/Sales, and FCF yield (Fig. 5). Our DCF natalie.koltermann@ubs.com

analysis also supports a $208 valuation (Fig. 8). +1-212-713 4229