Ross Stores Inc (ROST, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $130.92, Ross Stores Inc has witnessed a daily loss of 0.22%, marked against a three-month change of -14.85%. A thorough analysis, underlined by the GF Score, suggests that Ross Stores Inc is well-positioned for substantial growth in the near future.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 8/10
- Profitability rank: 9/10
- Growth rank: 9/10
- GF Value rank: 7/10
- Momentum rank: 7/10
Each one of these components is ranked and the ranks also have positive correlation with the long-term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With high ranks in profitability and growth, and slightly lower ranks in GF Value and momentum, GuruFocus assigned Ross Stores Inc the GF Score of 94 out of 100, which signals the highest outperformance potential.
Understanding Ross Stores Inc Business
Ross Stores Inc operates as an off-price apparel and accessories retailer with the majority of its sales derived from its Ross Dress for Less banner. The company opportunistically procures excess brand-name merchandise made available via manufacturing overruns and retail liquidation sales at a 20%-60% discount to full prices. As such, its stores are often filled with a vast array of stock-keeping units, each with minimal product depth that creates a treasure hunt shopping experience. The firm's more than 1,750 Ross Dress for Less stores are primarily located in densely populated suburban communities and typically serve middle-income consumers. Ross also operates about 350 DD's Discounts chains targeting lower-income shoppers.
Financial Strength Breakdown
According to the Financial Strength rating, Ross Stores Inc's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The Interest Coverage ratio for Ross Stores Inc stands impressively at 40.79, underscoring its strong capability to cover its interest obligations. This robust financial position resonates with the wisdom of legendary investor Benjamin Graham, who favored companies with an interest coverage ratio of at least 5.
With an Altman Z-Score of 5.42, Ross Stores Inc exhibits a strong defense against financial distress, highlighting its robust financial stability. With a favorable Debt-to-Revenue ratio of 0.27, Ross Stores Inc's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows Ross Stores Inc's impressive standing among its peers in generating profit. The Piotroski F-Score confirms Ross Stores Inc's solid financial situation based on Joseph Piotroski's nine-point scale, which measures a company's profitability, funding, and operating efficiency. Ross Stores Inc's strong Predictability Rank of 3.0 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, Ross Stores Inc demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 6.1%, which outperforms better than 55.03% of 1,054 companies in the Retail - Cyclical industry. Moreover, Ross Stores Inc has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 9, and the rate over the past five years is 21.5. This trend accentuates the company's continued capability to drive growth.
Conclusion
Ross Stores Inc's financial strength, profitability, and growth metrics, as highlighted by the GF Score, underscore the firm's unparalleled position for potential outperformance. With a strong balance sheet, impressive profitability, and robust growth prospects, Ross Stores Inc is well-equipped to navigate future challenges and capitalize on opportunities. For investors seeking companies with strong GF Scores, GuruFocus Premium members can explore more options using the following screener link: GF Score Screen.
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.
