Ross Stores Inc (ROST, Financial) has experienced a notable uptick in its stock price, with a 4.45% gain over the past week and an impressive 14.25% gain over the past three months. Currently, the company boasts a market capitalization of $43.62 billion, with its stock trading at $128.82. This valuation is particularly significant when considering the GF Value of $123.21, which suggests that the stock is fairly valued. The stability in valuation is further underscored by the past GF Value of $123.42, indicating a consistent market perception of the company's worth. Both the current and past GF Valuations categorize the stock as Fairly Valued, reflecting a market consensus on its pricing.
Introduction to Ross Stores Inc
Ross Stores Inc, a titan in the retail - cyclical industry, operates as a leading off-price apparel and home fashion retailer in the United States. With over 2,000 stores under the Ross Dress for Less and dd's Discounts banners, the company has carved out a niche by offering name-brand products at prices significantly lower than conventional retailers. Ross Stores' business model is predicated on a flexible merchandising approach and a no-frills shopping environment, which together foster a treasure-hunt shopping experience. This strategy has proven effective, with the company achieving a diverse product mix and a strong inventory turnover that supports its low-price model. In fiscal 2022, the company's sales were predominantly from home accents, ladies' department, menswear, accessories, shoes, and children's categories.
Assessing Ross Stores' Profitability
Ross Stores Inc's profitability is robust, with a Profitability Rank of 8/10, which is indicative of the company's strong financial health and the likelihood of maintaining such performance. The company's operating margin stands at 10.85%, outperforming 80.11% of 1,116 companies in the industry. Its return on equity (ROE) is an impressive 39.29%, better than 93.05% of its peers, demonstrating exceptional efficiency in generating profits from shareholders' equity. The return on assets (ROA) of 12.51% and return on invested capital (ROIC) of 22.06% further reflect the company's adeptness at utilizing its assets and the effectiveness of its capital investments. With a decade-long streak of profitability, Ross Stores showcases a strong track record that is better than 99.91% of 1,055 companies.
Growth Prospects of Ross Stores
The Growth Rank for Ross Stores is 6/10, which suggests a moderate potential for future performance. The company's 3-year revenue growth rate per share is 6.80%, surpassing 59.06% of 1,048 companies, while the 5-year rate is slightly higher at 7.60%, outdoing 68.22% of 922 companies. Looking ahead, the estimated total revenue growth rate for the next 3 to 5 years is 4.83%, which is more favorable than 45.04% of 242 companies. However, the 3-year EPS without NRI growth rate is at -1.60%, and the 5-year rate is at -4.20%, indicating some challenges in earnings trends. Nevertheless, the future EPS growth rate estimate for the next 3 to 5 years is a promising 13.06%, which is better than 56.14% of 57 companies.
Top Shareholders in Ross Stores
Among the top holders of Ross Stores Inc stock, PRIMECAP Management (Trades, Portfolio) leads with 10,912,149 shares, representing a 3.22% stake in the company. First Eagle Investment (Trades, Portfolio) follows with 3,668,566 shares, accounting for 1.08% ownership. Parnassus Value Equity Fund (Trades, Portfolio) holds a smaller portion, with 773,483 shares, equating to a 0.23% share.
Competitive Landscape
In comparison to its competitors, Ross Stores Inc holds a strong position within the retail - cyclical industry. Lululemon Athletica Inc (LULU, Financial) has a larger market cap of $53.46 billion, while Burlington Stores Inc (BURL, Financial) and Gap Inc (GPS, Financial) have market caps of $8.8 billion and $6.6 billion, respectively. This places Ross Stores in a competitive but stable position relative to its peers.
Conclusion
In summary, Ross Stores Inc's stock performance and market valuation have been characterized by a significant 14.25% gain over the past three months and a stable GF Value, indicating a fair valuation by the market. The company's strong profitability metrics and a decade-long track record of profitability underscore its financial health. While growth rates in earnings per share have seen some volatility, the projected future earnings potential remains optimistic. Ross Stores' competitive position within the industry, coupled with its effective business model and solid shareholder base, positions it well for continued success in the retail sector.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
