In the dynamic and highly competitive world of discount retail, two industry titans, Ross Stores, Inc. (ROST Quick QuoteROST - Free Report) and Dollar Tree, Inc. (DLTR Quick QuoteDLTR - Free Report) , have carved out distinct niches, each commanding strong consumer loyalty and market presence. Both operate within the resilient Retail – Discount Stores industry, a sector that thrives even amid economic uncertainty as shoppers increasingly seek value, affordability, and convenience. Known for weathering inflationary pressures and macroeconomic headwinds better than many other retail segments, discount retailers continue to gain ground as consumers prioritize essentials and deal-driven purchases.

While both retailers serve cost-conscious consumers, their business models, pricing structures, and product assortments diverge significantly, making them an intriguing study in contrasts. This face-off will delve into each company’s market positioning, financial performance, store footprint, operational strategies, and consumer engagement, revealing how ROST and DLTR are navigating evolving shopper behavior, supply chain challenges, and digital transformation in the post-pandemic retail landscape.

As these two giants continue to expand their reach and redefine value retailing, investors and analysts are watching closely to see which model proves more resilient and rewarding in the years ahead.

The Case for ROST Stock

Ross Stores holds a commanding position in the discount retail space, particularly within the off-price segment of apparel and home fashion. As the leading off-price retailer in the United States, Ross Stores has built a powerful reputation for delivering recognizable brands at significantly lower prices than traditional department stores. The company continues to outperform peers in terms of operational efficiency and profitability, with recent quarterly performance reflecting solid revenue growth and margin stability despite broader macroeconomic headwinds.

While comparable sales remained steady, momentum built throughout the quarter, reflecting improved customer traffic and stronger performance in key categories, such as cosmetics and women’s apparel. The company’s continued ability to source high-quality merchandise at value prices helps it retain a loyal customer base and differentiate itself in a competitive landscape.

Ross Stores’ business strategy centers around its agile and opportunistic buying model, which allows it to quickly adapt to changes in consumer demand and inventory availability. The company’s “packaway” approach, purchasing merchandise in advance and holding it until the right selling season, has proven instrumental in maintaining both product freshness and value. Its secondary banner, dd’s DISCOUNTS, has emerged as a high-potential growth vehicle, resonating particularly well with younger and multicultural shoppers looking for affordable fashion and home essentials. With a well-balanced merchandise mix across genders, age groups, and product categories, Ross Stores continues to appeal to a broad demographic, including value-focused middle-income households and bargain-savvy fashion seekers. 

Though Ross Stores has maintained a low digital profile compared to other major retailers, it is making meaningful strides in modernizing its brand experience. Ross Stores is also expanding its physical footprint, opening stores in both established and underpenetrated markets, signaling confidence in continued demand for its value-driven model. With a disciplined leadership team, a proven off-price strategy, and a loyal consumer base, Ross Stores presents a compelling long-term investment case in the evolving retail landscape.

The Case for DLTR Stock

Dollar Tree has solidified its standing as a powerhouse in the discount retail sector, particularly as it sharpens its focus on the core Dollar Tree banner, following the planned divestiture of Family Dollar. With thousands of stores across the country and consistent traffic gains, Dollar Tree is becoming a more formidable player in the Retail – Discount Stores industry. 

In first-quarter fiscal 2025, the company saw broad-based comparable sales growth driven by both traffic and average ticket increases, reflecting its strengthened value proposition. Its market share gains, particularly in consumables and immediate consumption categories, signal effective execution and growing consumer relevance, especially among higher-income shoppers. 

Dollar Tree is executing a comprehensive transformation by expanding its multi-price strategy, referred to as “3.0” stores, which has allowed the brand to move beyond the traditional $1.25 model and deliver a wider, more compelling product mix. This format has shown stronger comps than legacy formats, with continued rollout planned across a large portion of the chain by year-end. 

Simultaneously, the divestiture of Family Dollar is expected to enhance focus, simplify operations, improve profitability, and free up capital for reinvestment in the core Dollar Tree brand. Its strong seasonal performance, compelling discretionary assortment, and improved store conditions are further contributing to share gains in the highly competitive value retail space.    

On the innovation front, Dollar Tree is carefully evolving its customer engagement strategy without overextending into capital-intensive digital initiatives. It is also enhancing in-store experiences to reflect modern merchandising while scaling high-performing categories, such as snacks, beverages, seasonal décor, and freezer/cooler items. With flexibility built into its pricing, an expanding assortment tailored to localized needs, and a stronger appeal to higher-income and diverse shopper cohorts, Dollar Tree is better positioned than ever to compete in a rapidly evolving retail environment.

Management remains confident in its ability to navigate inflationary pressures and tariffs through its five-pronged mitigation strategy and multi-price expansion, which is driving higher traffic, ticket sizes, and improved discretionary sales.

How Does the Zacks Consensus Estimate Compare for ROST & DLTR?

The Zacks Consensus Estimate for Ross Stores’ fiscal 2025 sales implies growth of 3.9%, whereas EPS  suggests a year-over-year decline of 1.6%. The EPS estimates have declined 2 cents to $6.22 in the past 30 days.

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The Zacks Consensus Estimate for Dollar Tree’s fiscal 2025 EPS suggests year-over-year growth of 6.5%, whereas the sales estimate suggests a year-over-year decline of 38.2%. The EPS estimates have moved up 2 cents to $5.43 in the past seven days.

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Price Performance & Valuation of ROST & DLTR

Ross Stores currently trades at a forward 12-month P/E ratio of 20.18X, which is below the Zacks Retail - Discount Stores industry average of 32.34X, suggesting a reasonable valuation given its strong fundamentals. In contrast, Dollar Tree’s forward P/E stands at 17.76x, a lower to Ross Stores and  well below the broader industry average. 

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However, when it comes to stock performance, DLTR has outshone, delivering a 38.3% gain in the past six months, significantly outperforming ROST’s 15.8% decline and the industry’s 3.2% growth. This divergence reflects investor confidence in Dollar Tree’s turnaround and growth roadmap, particularly as it gains share and executes margin-enhancing initiatives. Ross Stores, while operationally sound, appears to be facing more cautious investor sentiment tied to flat comps and softer traffic trends.

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Conclusion

While both Ross Stores and Dollar Tree are formidable players in the discount retail space, current market dynamics and strategic execution tilt the scale in favor of Dollar Tree as the better buy right now. DLTR’s robust multi-price transformation, targeted store upgrades, and success in attracting higher-income consumers underscore a business not just adapting, but evolving to lead in a value-driven economy. The company’s reaffirmed guidance for sales and EPS growth in fiscal 2025, coupled with upward momentum in consensus estimates and strong recent stock performance, highlights its growing investor appeal.

Ross Stores remains a fundamentally solid business with long-term potential, but the near-term narrative reflects more muted expectations, with declining earnings estimates, weaker traffic trends, and a stock that has underperformed both DLTR and the industry. While its valuation may seem attractive, the current sentiment reflects caution, not conviction.

Therefore, for investors seeking stability, consistent brand-driven growth, and long-term value creation, DLTR stands out as the stronger, more reliable choice. DLTR currently carries a Zacks Rank #2 (Buy), whereas ROST has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.