Ross Stores stock has delivered very strong returns over the past few years and is currently trading with signals that lean expensive, which raises questions about how much of its growth story is already reflected in the share price.

• Ross Stores has returned 129.9% over the past 3 years, which puts recent enthusiasm firmly in focus when judging today’s pricing.
• Plans for around 110 new store openings in 2026 can support expectations for higher earnings over time, while the cost and execution risk of this expansion may weigh on what investors are willing to pay if results disappoint.
• The stock scores 0 out of 6 on Simply Wall St’s broader valuation checks, which suggests Ross Stores does not screen as a clear bargain on metrics such as P/E, price to cash flow and price to sales.

The issue now is whether Ross Stores’ strong multi year run leaves enough valuation support for new investors at current levels.

Does Ross Stores Look Pricey on Earnings?

The P/E ratio is a useful way to sanity check what you are paying for each dollar of Ross Stores earnings. Ross Stores currently trades on a P/E of 34.8x, which is clearly above the Specialty Retail industry average of about 20.2x and also above the peer group average of 26.9x. That means you are paying a higher earnings multiple for Ross Stores than for many similar retailers.

The Fair P/E Ratio model, which looks at the company’s growth profile, margins, size and risk, suggests a level closer to 20.4x. Compared with the current 34.8x, this points to a sizable gap and indicates that recent optimism, including the push to open about 110 new stores in 2026, is already strongly reflected in the valuation. On this framework, Ross Stores stock screens as overvalued on earnings relative to what the model would expect.

Overall, the current P/E suggests Ross Stores appears overvalued on an earnings multiple basis.

The Ross Stores Narrative: What Would Justify Today's Price?

Simply Wall St Narratives for Ross Stores sit between the P/E puzzle above and the real world by spelling out which paths for Ross Stores' growth, margins and earnings would need to play out for the stock to be worth materially more or less than it is today on the market. Where a single ratio or model gives you one neat figure, these narratives lay out the future that number assumes so you can watch how those assumptions hold up over time on the Community page.

Community views on Ross Stores are split between a resilient value retailer story and concern that investors are paying too much for that resilience.

Bull case: roughly fairly valued

"Investments in supply chain infrastructure and operational initiatives (e.g., new distribution center, store refreshes, rollout of self-checkout) are establishing a foundation for greater operating leverage and cost discipline, which should benefit net margins as these investments scale..."

Bear case: 236% overvalued

"The reason not to overpay for it is that Ross is the structurally smaller player in a business where buying scale is the moat itself, and it has been losing relative scale to TJX for a decade..."

Do you think there's more to the story for Ross Stores? Head over to our Community to see what others are saying!

The Bottom Line

Ross Stores currently carries an overvalued label on market multiples, with the P/E well ahead of sector and peer averages and the broader valuation checks scoring poorly. That does not rule out further gains; however, it does mean expectations for growth, margins and store expansion already sit high in the price. For you as an investor, the key question is whether Ross Stores can execute its growth and efficiency plans cleanly enough to sustain that premium multiple, or whether the market eventually demands a lower entry price if the story loses momentum.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.