Ross Stores(US:ROST) ZACKS·2025-11-25 15:30Core Viewpoint - The article discusses the reliability of Wall Street analysts' recommendations, particularly focusing on Ross Stores (ROST), and emphasizes the importance of using these recommendations in conjunction with other analytical tools like the Zacks Rank for making informed investment decisions [1][5]. Group 1: Brokerage Recommendations - Ross Stores has an average brokerage recommendation (ABR) of 1.60, indicating a rating between Strong Buy and Buy, based on recommendations from 20 brokerage firms [2]. - Out of the 20 recommendations, 14 are classified as Strong Buy, accounting for 70% of all recommendations [2]. Group 2: Limitations of Brokerage Recommendations - Studies indicate that brokerage recommendations have limited success in guiding investors towards stocks with the highest price increase potential [5]. - Analysts from brokerage firms tend to exhibit a strong positive bias in their ratings, often issuing five "Strong Buy" recommendations for every "Strong Sell" [6][11]. - The interests of brokerage firms may not align with those of retail investors, leading to potential misguidance regarding stock price movements [7][11]. Group 3: Zacks Rank as an Alternative - The Zacks Rank is presented as a more reliable indicator of a stock's near-term price performance, based on earnings estimate revisions, and is classified into five groups from Strong Buy to Strong Sell [8][12]. - The Zacks Rank is updated more frequently than the ABR, reflecting timely changes in earnings estimates and business trends [13]. - For Ross Stores, the Zacks Consensus Estimate for the current year has increased by 4.4% to $6.36, indicating positive sentiment among analysts regarding the company's earnings prospects [14]. Group 4: Investment Implications - The recent change in the consensus estimate and other factors have led to a Zacks Rank 2 (Buy) for Ross Stores, suggesting that the Buy-equivalent ABR may serve as a useful guide for investors [15].