Ross Stores (ROST) ended a trading session at $149.98, marking a -1.34% change from the day’s previous closing price. This performance lagged behind the S&P 500’s decrease of 0.28%, the Dow’s 0.52% fall, and the Nasdaq’s 0.08% dip.

Over the past month, Ross Stores shares have gained 1.86%, surpassing the Retail-Wholesale sector’s 3.47% loss but trailing the S&P 500’s 4.03% gain. The upcoming earnings report is expected to show that the company’s earnings per share (EPS) will be $1.4, a 5.41% drop from the previous year, while revenue is predicted to rise by 6.18% to $5.38 billion.

Annual projections foresee earnings of $6.2 per share and $22.12 billion in revenue, shifting -1.9% and +4.67% from the previous year. Recent analyst estimate revisions for Ross Stores indicate changes in business trends, reflecting confidence in performance. These revisions impact stock price forecasts as seen in the Zacks Rank, which rates Ross Stores at #3 (Hold).

Ross Stores’s valuation metrics include a Forward P/E ratio of 24.51, above the industry average of 22.86. It has a PEG ratio of 2.91, whilst the Retail – Discount Stores industry averages 2.62. The Retail – Discount Stores industry ranks in the top 28% of all industries, with favourable rating outcomes.

We see that Ross Stores (ROST) has recently underperformed the broader market, which is drawing attention as we head towards the next earnings release. The stock’s valuation appears somewhat stretched with a forward P/E ratio of 24.51, a premium to its industry. This high valuation could make it vulnerable if the upcoming report disappoints.

The key conflict for us is the projection of rising revenues but falling earnings per share. This points directly to potential margin compression, a trend we have seen across the retail sector in 2025 due to persistent supply chain costs. The latest retail sales data from September 2025 showed consumer spending is strong, but labor costs also ticked up 0.4%, creating a challenge for profitability.

With analyst estimates being revised slightly lower, a neutral “Hold” rating is in place. This lack of strong conviction from analysts suggests uncertainty, which often leads to volatility around earnings events. We are therefore looking at an environment ripe for a significant price move after the numbers are released.

For traders, this signals that options strategies capitalizing on price movement could be effective. A long straddle or strangle, which involves buying both a call and a put option, could be beneficial if the stock makes a larger-than-expected move in either direction. Implied volatility will likely rise as the earnings date approaches, making earlier entry more cost-effective.

Alternatively, for those leaning bearishly due to the margin concerns, a bear put spread offers a defined-risk way to position for a potential drop. We saw a similar setup before the company’s earnings miss in the second quarter of 2024, where margin guidance led to a sharp, single-day decline. That historical precedent suggests the market will punish any sign of continued profit erosion.

On the bullish side, the strong revenue growth forecast should not be ignored, as it shows solid consumer demand for off-price retail. Recent consumer confidence reports from early October 2025 indicated shoppers are increasingly value-conscious, which historically benefits Ross Stores. Traders who believe the market is overly focused on costs could use bull call spreads to bet on a positive surprise driven by strong sales figures.