Wall Street Analysts See Ross Stores (ROST) as a Buy: Should You Invest?

Core Viewpoint - The article discusses the reliability of brokerage 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. Brokerage Recommendations - Ross Stores has an average brokerage recommendation (ABR) of 1.50, indicating a consensus between Strong Buy and Buy, based on 20 brokerage firms' recommendations [2] - Out of the 20 recommendations, 15 are Strong Buy, accounting for 75% of the total recommendations [2] Limitations of Brokerage Recommendations - Solely relying on brokerage recommendations for investment decisions may not be wise, as studies show limited success in guiding investors towards stocks with the best price increase potential [5] - Brokerage firms often exhibit a positive bias in their ratings due to vested interests, leading to a disproportionate number of Strong Buy recommendations compared to Strong Sell [6][11] Zacks Rank as an Alternative - The Zacks Rank categorizes stocks into five groups based on earnings estimate revisions, providing a more effective indicator of a stock's price performance in the near future [8][12] - The Zacks Rank is distinct from the ABR, as it is a quantitative model that reflects timely earnings estimate revisions, while the ABR may not always be up-to-date [10][13] Current Earnings Estimates for Ross Stores - The Zacks Consensus Estimate for Ross Stores has increased by 4.1% over the past month to $6.43, indicating growing optimism among analysts regarding the company's earnings prospects [14] - This increase in consensus estimates, along with other factors, has resulted in a Zacks Rank 2 (Buy) for Ross Stores, suggesting a positive outlook for the stock [15]