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Ross Stores (ROST)
NASDAQ:ROST
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Ross Stores
(NASDAQ:ROST)
75Outperform
Positive Factors
Business Strategy
Management is focused on driving comp growth, with the strategy still driven by merchandising but increasingly supported by stronger marketing and store experience.
Market Environment
A potentially weakening consumer environment will mean more consumers are likely to trade down to the off-price channel in search of value and the treasure hunt shopping experience.
Market Positioning
ROST has been a prime beneficiary of the shift from department stores to off-price, proving insulated from Amazon's threat to retail.
Negative Factors
Consumer Demographics
There is more recent speculation of weaker traffic from Hispanic customers in borderland territories.
Economic Pressures
Ross has a typically lower-income consumer when compared to TJX, with inflation a larger headwind over the last three years.
Leadership Concerns
Ross shares continued to slide after Conroy’s appointment due to his lack of experience in off-price, an industry known for home-grown talent.
Ross Stores (ROST) vs. S&P 500 (SPY)
Market Cap
$43.14B
Dividend Yield1.16%
Average Volume (3M)3.57M
Price to Earnings (P/E)20.8
Beta (1Y)0.62
Revenue Growth3.69%
EPS Growth13.71%
CountryUS
Employees107,000
SectorConsumer Cyclical
Sector Strength61
IndustryApparel - Retail
Share Statistics
EPS (TTM)6.32
Shares Outstanding328,821,470
10 Day Avg. Volume3,223,852
30 Day Avg. Volume3,574,969
Financial Highlights & Ratios
PEG Ratio1.52
Price to Book (P/B)N/A
Price to Sales (P/S)1.92
Price to Cash Flow (P/CF)19.90
P/FCF Ratio27.90
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$157.93Price Target Upside21.20% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering17
Ross Stores Business Overview & Revenue Model
Company DescriptionRoss Stores, Inc. is an S&P 500 and Fortune 500 company headquartered in Dublin, California. It operates under the brand names Ross Dress for Less, the largest off-price apparel and home fashion chain in the United States, and dd's DISCOUNTS. The company specializes in offering significant savings on a wide range of products, including apparel, footwear, accessories, and home décor, compared to traditional department and specialty stores. Ross Stores targets value-conscious customers by providing a constantly changing assortment of high-quality and name-brand merchandise at competitive prices.
How the Company Makes MoneyRoss Stores makes money primarily through the sale of discounted merchandise in its retail stores. The company's revenue model is centered around purchasing excess inventory and overruns from manufacturers and other retailers at reduced prices, allowing it to offer products at lower costs than traditional retail stores. This off-price retail model enables Ross to provide significant discounts to consumers while maintaining healthy profit margins. Key revenue streams include the sale of apparel, footwear, accessories, and home-related products. Additionally, the company's substantial store footprint and strategic buying practices contribute to its earnings by leveraging economies of scale and minimizing operational costs. Ross Stores does not rely heavily on e-commerce, focusing instead on the in-store shopping experience to drive sales.
Ross Stores Financial Statement Overview
Summary
Ross Stores showcases a solid financial standing with strong income statement metrics, a stable balance sheet, and healthy cash flow generation. The company demonstrates consistent revenue and profit growth, efficient equity utilization, and strong cash conversion, positioning it well for future expansion and resilience in the discretionary retail market.Income Statement
Ross Stores has demonstrated robust financial performance with a consistent increase in revenue and profitability. The TTM shows a Gross Profit Margin of 28.0% and a Net Profit Margin of 9.9%, reflecting strong operational efficiency. Revenue growth from the previous year is impressive, and the EBIT and EBITDA margins are healthy at 12.2% and 14.5%, respectively. These metrics indicate a solid and improving income statement performance.85
Very Positive
Balance Sheet
Ross Stores maintains a stable balance sheet with a Debt-to-Equity Ratio of 1.09, indicating moderate leverage which is manageable. The Return on Equity (ROE) stands at 40.2%, showcasing efficient use of equity to generate profits. The Equity Ratio of 35.3% reflects a healthy balance between debt and equity, though there is room for improvement in reducing liabilities.78
Positive
Cash Flow
The company's cash flow position is strong, evidenced by a Free Cash Flow Growth Rate of -3.7%, which is slightly down but remains robust overall. The Operating Cash Flow to Net Income Ratio is 1.15, indicating good cash generation relative to net income. Additionally, the Free Cash Flow to Net Income Ratio is 0.80, showing effective conversion of earnings into free cash flow, supporting liquidity and potential for reinvestment.82
Very Positive
| Breakdown | |||||
| TTM | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 21.24B | 20.38B | 18.70B | 18.92B | 12.53B | 16.04B | Gross Profit |
| 5.95B | 5.58B | 4.75B | 5.21B | 2.69B | 4.50B | EBIT |
| 2.60B | 2.31B | 1.99B | 2.33B | 189.71M | 2.15B | EBITDA |
| 3.09B | 2.97B | 2.38B | 2.69B | 553.96M | 2.52B | Net Income Common Stockholders |
| 2.11B | 1.87B | 1.51B | 1.72B | 85.38M | 1.66B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 734.60M | 4.87B | 4.55B | 4.92B | 4.82B | 1.35B | Total Assets |
| 2.96B | 14.30B | 13.42B | 13.64B | 12.72B | 9.35B | Total Debt |
| 150.00M | 5.75B | 5.71B | 5.62B | 5.73B | 3.49B | Net Debt |
| -582.80M | 875.26M | 1.15B | 699.77M | 913.51M | 2.14B | Total Liabilities |
| 1.68B | 9.43B | 9.13B | 9.58B | 9.43B | 5.99B | Stockholders Equity |
| 1.29B | 4.87B | 4.29B | 4.06B | 3.29B | 3.36B |
| Cash Flow | Free Cash Flow | ||||
| 1.69B | 1.75B | 1.04B | 1.18B | 1.84B | 1.62B | Operating Cash Flow |
| 2.42B | 2.51B | 1.69B | 1.74B | 2.25B | 2.17B | Investing Cash Flow |
| -736.48M | -762.81M | -654.07M | -557.84M | -405.43M | -554.97M | Financing Cash Flow |
| -1.83B | -1.43B | -1.41B | -1.15B | 1.70B | -1.68B |
Ross Stores Technical Analysis
Neutral
130.31
Price Trends
135.79
Negative
142.55
Negative
144.03
Negative
Market Momentum
-2.61
Negative
46.99
Neutral
68.60
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ROST, the sentiment is Neutral. The current price of 130.31 is above the 20-day moving average (MA) of 127.30, below the 50-day MA of 135.79, and below the 200-day MA of 144.03, indicating a neutral trend. The MACD of -2.61 indicates Negative momentum. The RSI at 46.99 is Neutral, neither overbought nor oversold. The STOCH value of 68.60 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for ROST.
Ross Stores Risk Analysis
Ross Stores disclosed 21 risk factors in its most recent earnings report. Ross Stores reported the most risks in the “Ability to Sell” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Ross Stores Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $136.46B | 28.68 | 61.98% | 1.23% | 3.95% | 10.34% | |
75 Outperform | $43.14B | 20.77 | 40.28% | 1.16% | 3.69% | 13.71% | |
70 Outperform | $14.58B | 29.70 | 42.55% | ― | 9.33% | 50.05% | |
69 Neutral | $3.17B | 5.51 | 13.40% | 6.18% | -3.60% | 442.87% | |
64 Neutral | $3.90B | 13.41 | 29.58% | 3.26% | 2.20% | 120.00% | |
59 Neutral | $11.22B | 10.13 | -1.22% | 3.96% | 1.32% | -18.57% | |
57 Neutral | $798.19M | 7.37 | 2.83% | 22.66% | -7.18% | -65.92% |
* Consumer Cyclical Sector Average
Performance Comparison
ROST
Ross Stores
130.31
-8.49
-6.12%
KSS
Kohl's
7.17
-15.53
-68.41%
M
Macy's
11.38
-7.30
-39.08%
JWN
Nordstrom
23.34
4.53
24.08%
TJX
TJX Companies
122.16
27.21
28.66%
BURL
Burlington Stores
231.50
32.20
16.16%
Ross Stores Earnings Call Summary
Earnings Call Date: Mar 4, 2025 | % Change Since: -3.85% | Next Earnings Date: May 15, 2025
Earnings Call Sentiment Neutral
The earnings call reflected a solid performance in fiscal 2024 with strong sales growth and strategic expansion plans. However, there is caution going forward due to softening sales trends and external macroeconomic pressures. While the company is well-positioned with a strong cash position and continued store expansion, the outlook for fiscal 2025 remains cautious.Highlights
Strong Fourth Quarter Sales Performance
Sales for the fourth quarter of 2024 were $5.9 billion with a comparable store sales gain of 3% on top of a 7% gain in the same period last year.
Fiscal Year 2024 Revenue and Earnings Growth
For fiscal 2024, earnings per share were $6.32, up from $5.56 in the prior year. Net income increased to $2.1 billion compared to $1.9 billion last year. Total sales for the year increased to $21.1 billion, up from $20.4 billion.
Store Expansion and Share Repurchase Program
The company added 75 new Ross Dress for Less stores and 14 dd’s DISCOUNTS stores during the year, ending with 2,186 stores. Additionally, 7.3 million shares were repurchased for $1.05 billion.
Increased Dividends
The Board approved a 10% increase in the quarterly cash dividend to $0.405 per share.
Lowlights
Slight Decline in Fourth Quarter Earnings Per Share
Earnings per share for the fourth quarter were $1.79 compared to $1.82 in the previous year, with net income decreasing from $610 million to $587 million.
Cautious Outlook for Fiscal 2025
Comparable store sales for the first quarter of fiscal 2025 are expected to be down 3% to flat, with earnings per share projected at $1.33 to $1.47, compared to $1.46 last year.
Softening Sales Trends
Sales trends began softening later in January and into February, attributed to unseasonable weather and macroeconomic factors affecting customer traffic.
Flat Operating Margin
Fourth quarter operating margin of 12.4% was flat compared to last year.
Company Guidance
During the Ross Stores Fourth Quarter and Fiscal 2024 Earnings Release Conference Call, management provided guidance for fiscal 2025, projecting earnings per share to range from $5.95 to $6.55, compared to $6.32 in fiscal 2024. They anticipate comparable store sales for the year to fluctuate between a 1% decrease and a 2% increase. Total sales for fiscal 2025 are expected to rise by 1% to 5%. The company plans to open approximately 90 new locations, comprising about 80 Ross and 10 dd’s DISCOUNTS stores. Operating margin for the full year is projected to be between 11.5% and 12.2%, slightly down from 12.2% in 2024. Capital expenditures for 2025 are estimated to be around $855 million. Additionally, Ross Stores plans to complete the remaining $1.05 billion under its two-year $2.1 billion share repurchase program and has increased its quarterly cash dividend by 10% to $0.405 per share.Ross Stores Corporate Events
Executive/Board Changes
Ross Stores Announces CFO Transition Plan for 2025
Neutral
Feb 20, 2025
On February 20, 2025, Ross Stores announced the upcoming retirement of Adam Orvos as Chief Financial Officer, effective September 30, 2025. William Sheehan has been appointed Deputy Chief Financial Officer as of February 16, 2025, and is set to succeed Mr. Orvos on October 1, 2025. The transition is expected to be smooth due to Sheehan’s extensive experience within the company and the retail industry. This leadership change is anticipated to maintain Ross Stores’ strong financial position and ensure continued expertise in financial operations.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.