Ross Stores, Inc. (ROST) | Investment Case

1. Company Snapshot

1.a. Company Description

Ross Stores, Inc., together with its subsidiaries, operates off-price retail apparel and home fashion stores under the Ross Dress for Less and dd's DISCOUNTS brand names.Its stores primarily offer apparel, accessories, footwear, and home fashions.The company's Ross Dress for Less stores sell its products at department and specialty stores primarily to middle income households; and dd's DISCOUNTS stores sell its products at department and discount stores for households with moderate income.

As of July 5, 2022, it operated approximately 1,950 stores under the Ross Dress for Less and dd's DISCOUNTS name in 40 states, the District of Columbia, and Guam.Ross Stores, Inc.was incorporated in 1957 and is headquartered in Dublin, California.

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1.b. Last Insights on ROST

Breaking News: Ross Stores Inc reported Q4 earnings and sales that beat estimates, driven by strong holiday assortments, fresh marketing, and in-store execution. The company's total sales increased 12% to $6.6 billion, ahead of expectations. EPS was $2.00, exceeding expectations. Same-store sales surged 9% year-over-year. The company announced a 10% dividend hike and a new $2.55B buyback program. FY26 view is optimistic, with higher comps and margins expected. Guidance for Q1 and FY26 is above estimates. Analysts recommend a buy.

1.c. Company Highlights

Last Price	213.52
Change Percentage	8.03%
Open	214.75
Previous Close	197.64
Market Cap ( Millions)	69442
Volume	6690363
Year High	216.8
Year Low	122.36
M A 50	190.93
M A 200	160.15

FCF Yield	3.18%
Dividend Yield	0.76%
ROE	36.25%
Debt / Equity	80.49%
Net Debt / EBIDTA	17.24%
Price To Book	10.54
Price Earnings Ratio	31.83
Price To FCF	31.46
Price To sales	3.05
EV / EBITDA	19.55

2. Ross Stores' Strong Q4 Earnings Driven by Sales Growth and Margin Expansion

Ross Stores reported a robust fourth quarter with total sales growing 12% to $6.6 billion, driven by a 9% increase in comparable store sales, primarily due to an increase in transactions. The operating margin was 12.3%, and net income was $646 million, with earnings per share of $2, a 21% increase from the prior year, beating analyst estimates of $1.9. For the full year, total sales increased 8% to $22.8 billion, and net income was $2.1 billion, with earnings per share of $6.61, up 10% from the prior year.

Publication Date: 07:56

                                    📋 Highlights
                                    Q4 Sales Growth::
                                                Total sales rose 12% to $6.6 billion, with comparable store sales up 9%, driven by increased transactions.
Profitability Expansion::
                                                Operating margin reached 12.3%, and net income hit $646 million, with EPS climbing 21% to $2.
Shareholder Returns::
                                                Completed a $2.1 billion stock repurchase program and authorized a new $2.55 billion program, alongside a 10% dividend increase to $0.445/share.
2026 Guidance::
                                                EPS projected at $7.02–$7.36 (+10–14% YoY), with total sales growth of 5–7% and operating margin of 12–12.3%.
New Store Expansion::
                                                Plans to open 110 new stores in 2026 (85 Ross, 25 dd's DISCOUNTS), supporting long-term growth through strategic location additions.

                                

Operational Highlights

The company's strong performance was driven by better buying and merchants' good decisions, with a 7-8% comp growth expected in Q1. The ladies' business acceleration is attributed to a brand strategy reset 2 years ago, with a focus on bringing in branded bargains. Store experience improvements, including targeted payroll investments and self-checkout expansion, are driving positive results, with customer count growth broad-based across income demographics and age groups.

Guidance and Outlook

For 2026, Ross Stores expects comparable store sales to increase 3-4%, and earnings per share to be $7.02-$7.36, with total sales growth of 5-7%, and operating margin of 12-12.3%. The company plans to open 110 new stores, including 85 Ross and 25 dd's DISCOUNTS locations. The guidance for the year encompasses a conservative view, but internally, the company is pushing for a growth orientation.

Valuation and Growth Prospects

With a P/E Ratio of 31.83 and an expected revenue growth rate of 7.6% next year, Ross Stores' valuation appears reasonable. The company's ROE of 36.25% and ROIC of 17.1% indicate strong profitability. As the company continues to expand its store base and improve its operational efficiency, it is well-positioned for long-term growth.

dd's DISCOUNTS Performance and Strategy

Ross Stores plans to open 25 new dd's stores in 2026, up from 10 in 2025, using a similar strategy that drove success in the Ross chain. The company applies its good, better, best strategy to dd's, with a focus on finding the right balance of branded and private-label merchandise. The reacceleration of dd's is not due to changes in store size, but rather strong new store performance.

3. NewsRoom

Market Today: Wall St. Rebounds; NVDA, AMZN, TGT in Focus

Mar -04

Source: gurufocus.com

Why Ross Stores Stock Jumped Today

Mar -04

Source: fool.com

Stock Market Today: Major Indexes Surge After Sell-Off; Bitcoin, Crypto-Tied Stocks Soar

Mar -04

Source: investopedia.com

The Secret To Why Ross Stores Is Riding High And Shares Have Soared

Mar -04

Source: forbes.com

What's Going On With Ross Stores Stock Today?

Mar -04

Source: benzinga.com

Ross Stores: Strong Q4 Results Stretch The Valuation

Mar -04

Source: seekingalpha.com

Wednesday's Earnings Movers: ROST & ANF Mixed Retail Picture, GTLB Disappoints

Mar -04

Source: youtube.com

Why This Retail Stock is Scaling Wall Street

Mar -04

Source: schaeffersresearch.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.50%)

6. Segments

Off-Price Retailing

Expected Growth: 4.5%

Ross Stores' off-price model benefits from consumers seeking value in a uncertain economic environment, driving growth. Furthermore, the retailer's ability to offer a wide range of branded apparel and home goods at discounted rates attracts price-conscious customers, leading to market share gains.

7. Detailed Products

Apparel

Ross Stores, Inc. offers a wide range of apparel products for men, women, and kids, including casual and dressy clothing, outerwear, and activewear.

Home Accents

Ross Stores, Inc. sells a variety of home accents, including decorative items, kitchenware, and textiles.

Furniture

Ross Stores, Inc. offers a selection of furniture pieces, such as sofas, loveseats, chairs, and tables.

Bed and Bath

Ross Stores, Inc. sells a range of bed and bath products, including bedding, towels, and kitchen linens.

Luggage and Accessories

Ross Stores, Inc. offers a variety of luggage, handbags, and accessories, such as wallets, hats, and scarves.

Beauty and Fragrances

Ross Stores, Inc. sells a range of beauty and fragrance products, including skincare, haircare, and perfumes.

Shoes

Ross Stores, Inc. offers a wide selection of shoes for men, women, and kids, including athletic shoes, boots, and sandals.

8. Ross Stores, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Ross Stores, Inc. faces moderate threat from substitutes as customers have limited alternatives for off-price department store shopping experience. However, online shopping platforms and discount stores can be considered as substitutes.

Bargaining Power Of Customers

Ross Stores, Inc. has a large customer base, but individual customers have limited bargaining power due to the company's off-price business model, which offers a wide range of products at discounted prices.

Bargaining Power Of Suppliers

Ross Stores, Inc. has a diverse supplier base, which reduces dependence on individual suppliers. However, suppliers of popular brands may have some bargaining power due to their brand reputation.

Threat Of New Entrants

The threat of new entrants is low for Ross Stores, Inc. due to the high barriers to entry, including the need for significant capital investment, establishing relationships with suppliers, and building a large store network.

Intensity Of Rivalry

The off-price department store industry is highly competitive, with Ross Stores, Inc. competing with TJX Companies, Burlington Stores, and other regional players. The company needs to maintain its competitive edge through effective pricing, inventory management, and customer service.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	39.23%
Debt Cost	3.95%
Equity Weight	60.77%
Equity Cost	9.26%
WACC	7.17%
Leverage	64.55%

11. Quality Control: Ross Stores, Inc. passed 5 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Buckle

A-Score: 6.8/10

Value: 5.0

Growth: 4.0

Quality: 7.6

Yield: 10.0

Momentum: 7.0

Volatility: 7.3

1-Year Total Return ->

PulteGroup

A-Score: 5.8/10

Value: 6.0

Growth: 8.8

Quality: 7.7

Yield: 2.0

Momentum: 4.0

Volatility: 6.3

1-Year Total Return ->

Booking

A-Score: 5.8/10

Value: 3.6

Growth: 8.7

Quality: 8.0

Yield: 1.0

Momentum: 5.0

Volatility: 8.3

1-Year Total Return ->

TJX

A-Score: 5.6/10

Value: 1.6

Growth: 6.4

Quality: 5.8

Yield: 2.0

Momentum: 8.0

Volatility: 10.0

1-Year Total Return ->

Ross Stores

A-Score: 5.5/10

Value: 2.2

Growth: 5.9

Quality: 6.5

Yield: 2.0

Momentum: 7.0

Volatility: 9.3

1-Year Total Return ->

Lennar

A-Score: 4.8/10

Value: 6.8

Growth: 4.3

Quality: 5.9

Yield: 3.0

Momentum: 2.5

Volatility: 6.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

7.95%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

7.17%

Ross Stores, Inc. - US7782961038

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on ROST

1.c. Company Highlights

Expensive

Less Volatile

Strong Momentum

Earnings Beats

Better Quality

Revenues Miss

Average Quality

Revenues Beats

2. Ross Stores' Strong Q4 Earnings Driven by Sales Growth and Margin Expansion

Operational Highlights

Guidance and Outlook

Valuation and Growth Prospects

dd's DISCOUNTS Performance and Strategy

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.50%)

6. Segments

Off-Price Retailing

Expected Growth: 4.5%

7. Detailed Products

Apparel

Home Accents

Furniture

Bed and Bath

Luggage and Accessories

Beauty and Fragrances

Shoes

8. Ross Stores, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Ross Stores, Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

213.52$

Current Price

213.52$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA