Ross Stores, Inc. (ROST)

Ross Stores, Inc. (ROST) Consumer Business Overview

Ross Stores, Inc. is a leading off-price apparel and home fashion retailer, operating Ross Dress for Less and dd's DISCOUNTS stores. Targeting value-conscious consumers, the company differentiates itself through opportunistic buying and efficient operations, navigating the competitive retail landscape with a focus on affordability and accessibility.

What Is the Investment Thesis for ROST?

Ross Stores, Inc. presents a compelling investment case based on its established position in the off-price retail market and consistent financial performance. With a market capitalization of $68.46B and a profit margin of 9.4%, the company demonstrates financial stability. A key driver is the company's ability to maintain a gross margin of 27.9% through efficient inventory management and strategic sourcing. The company's expansion plans and focus on value-oriented consumers position it well for future growth. The dividend yield of 0.74% provides a modest return for investors. However, the P/E ratio of 32.1 suggests a premium valuation, and potential risks include economic downturns affecting consumer spending and increased competition from other off-price retailers.

Based on FMP financials and quantitative analysis

ROST Key Highlights

• Market capitalization of $68.46B, reflecting strong investor confidence.
• Profit margin of 9.4%, indicating efficient operations and cost management.
• Gross margin of 27.9%, demonstrating effective sourcing and pricing strategies.
• Dividend yield of 0.74%, providing a steady income stream for shareholders.
• Operates approximately 1,950 stores as of July 5, 2022, showcasing extensive market reach.

Who Are ROST's Competitors?

ROST is benchmarked below against 8 industry peers on price, market cap, and our AI MoonshotScore.

AI Score by Stock Expert AI · Price data: FMP / Yahoo Finance

What Are ROST's Key Strengths?

• Strong brand recognition and customer loyalty.
• Efficient supply chain and inventory management.
• Opportunistic buying practices.
• Extensive store network.

What Are ROST's Weaknesses?

• Limited online presence.
• Dependence on brick-and-mortar stores.
• Vulnerability to economic downturns.
• Potential for inventory obsolescence.

What Could Drive ROST Stock Higher?

• Potential expansion into new geographic markets, increasing store count and revenue.
• Continued focus on opportunistic buying, maintaining competitive pricing.
• Enhancement of supply chain efficiencies, reducing costs and improving inventory management.

What Are the Key Risks for ROST?

• Insider selling — insiders were net sellers of roughly $16.6M recently.
• Economic downturns could negatively impact consumer spending and sales.
• Increased competition from other off-price retailers could erode market share.
• Supply chain disruptions could lead to inventory shortages and higher costs.
• Changes in consumer preferences could impact demand for Ross Stores' merchandise.

What Are the Growth Opportunities for ROST?

• Expansion of Store Footprint: Ross Stores has the opportunity to expand its store network in both existing and new markets. The company's disciplined approach to site selection and store economics supports profitable growth. Increasing the number of Ross Dress for Less and dd's DISCOUNTS stores can drive revenue growth and market share. The market size for off-price retail is estimated to continue growing, providing a favorable backdrop for expansion. Timeline: Ongoing.
• Enhancement of E-Commerce Capabilities: While Ross Stores primarily operates brick-and-mortar stores, there is an opportunity to enhance its e-commerce presence. Developing a robust online platform can attract new customers and complement the in-store experience. The e-commerce market for apparel and home fashion is substantial and growing, offering a significant revenue opportunity. Timeline: 2-3 years.
• Expansion of Product Categories: Ross Stores can expand its product categories to attract a broader customer base and increase sales per store. Introducing new categories, such as beauty products or home decor items, can drive incremental revenue. Careful selection of new categories and effective merchandising are crucial for success. The market size for these categories is significant, providing ample opportunity for growth. Timeline: 1-2 years.
• Improvement of Supply Chain Efficiency: Ross Stores can improve its supply chain efficiency to reduce costs and enhance inventory management. Optimizing the supply chain can lead to faster inventory turnover and reduced markdowns. Investing in technology and infrastructure can support these efforts. A more efficient supply chain can improve profitability and competitiveness. Timeline: Ongoing.
• Strengthening Customer Loyalty Programs: Implementing or enhancing customer loyalty programs can increase customer retention and drive repeat purchases. Loyalty programs can offer exclusive discounts, personalized offers, and other incentives to encourage customers to shop at Ross Stores. A strong loyalty program can differentiate Ross Stores from its competitors and build a loyal customer base. Timeline: 1 year.

What Opportunities Does ROST Have?

• Expansion into new markets.
• Enhancement of e-commerce capabilities.
• Introduction of new product categories.
• Strengthening customer loyalty programs.

What Threats Does ROST Face?

• Increased competition from other off-price retailers.
• Changes in consumer preferences.
• Economic downturns affecting consumer spending.
• Supply chain disruptions.

What Are ROST's Competitive Advantages?

• Opportunistic buying: Ability to source merchandise at significantly reduced prices.
• Efficient operations: Lean operating model and cost control measures.
• Brand recognition: Established brand names with a loyal customer base.
• Store network: Extensive network of stores across multiple states.

What Does ROST Do?

Ross Stores, Inc. was founded in 1957 and has evolved into a major player in the off-price retail sector. The company operates through two primary brands: Ross Dress for Less and dd's DISCOUNTS. Ross Dress for Less caters to middle-income households, offering a wide assortment of first-quality, in-season apparel, accessories, footwear, and home fashions at prices significantly below department and specialty store levels. dd's DISCOUNTS targets households with more moderate incomes, providing a similar value proposition with a focus on deeply discounted merchandise. As of July 5, 2022, Ross Stores operated approximately 1,950 stores across 40 states, the District of Columbia, and Guam. The company's success is rooted in its ability to source merchandise opportunistically, maintain lean operations, and offer a compelling value proposition to its target customer base. Ross Stores' headquarters are located in Dublin, California.

What Products and Services Does ROST Offer?

• Operates Ross Dress for Less stores targeting middle-income households.
• Operates dd's DISCOUNTS stores targeting moderate-income households.
• Offers apparel, accessories, footwear, and home fashions at discounted prices.
• Sources merchandise opportunistically from various vendors.
• Maintains a lean operating model to control costs.
• Provides a value-oriented shopping experience for customers.

How Does ROST Make Money?

• Purchases merchandise at discounted prices from manufacturers and retailers.
• Sells merchandise at prices below department and specialty stores.
• Operates a network of brick-and-mortar stores.
• Focuses on efficient inventory management and cost control.

What Industry Does ROST Operate In?

Ross Stores operates within the apparel retail industry, which is characterized by intense competition and evolving consumer preferences. The off-price retail segment has demonstrated resilience, driven by value-conscious consumers seeking discounts on branded merchandise. The industry is influenced by macroeconomic factors, such as consumer spending and disposable income. Ross Stores competes with other off-price retailers, department stores, and online marketplaces. The company's focus on opportunistic buying and efficient operations allows it to maintain a competitive edge in this dynamic environment.

Who Are ROST's Key Customers?

• Middle-income households seeking value-oriented apparel and home fashions.
• Moderate-income households looking for deeply discounted merchandise.
• Customers who appreciate a treasure hunt shopping experience.
• Price-conscious consumers seeking branded merchandise at affordable prices.

Net buyingInsider Activity

Over the past six months, Ross Stores, Inc. insiders filed 30 SEC Form 4 transactions — 14 sales and 16 purchases. On net that is roughly 17K shares acquired (about $16.6M) — insiders putting money in tends to read as conviction.

FY2027 estForward Outlook

Wall Street analysts project Ross Stores, Inc. revenue of about $25.15B for fiscal 2027, with EPS near $7.82. The estimate reflects 14 contributing analysts.

F-Score 8/9Financial Health

Ross Stores, Inc.'s Piotroski F-Score is 8/9, a 9-point checklist of profitability, leverage and efficiency — signaling solid underlying fundamentals. Its Altman Z-Score of 7.24 places it in the safe zone, indicating low near-term bankruptcy risk.

ROE 38%Key Financial Metrics

Return on equity for Ross Stores, Inc. stands at 38.4%, a gauge of how efficiently it converts shareholder capital into profit. Return on assets is 14.9%, showing how much profit it generates from its asset base. ROST trades at a trailing price-to-earnings ratio of 32.06, below the Consumer Cyclical sector average of ~39x. Its free cash flow yield is 3.8%, a gauge of the cash the business throws off relative to its market value. A current ratio of 1.54 indicates the company holds enough short-term assets to cover its near-term obligations. Its earnings yield is 3.4%, the inverse of the P/E and a quick read on earnings relative to price.

Ross Stores, Inc. (ROST) Valuation Context

Valued at $68.46B, ROST is classified as a large-cap stock. Relative to its peer group, ROST's quantitative score of 88/100 is above the peer average of 65/100.

Company Profile

Ross Stores, Inc. operates in the Apparel - Retail industry within the Consumer Cyclical sector. It is headquartered in Dublin, US. The company is led by CEO James G. Conroy. ROST has traded publicly since 1985.

ROST Financials

ROST Latest News

ROST Analyst Consensus

ROST MoonshotScore

Latest Ross Stores, Inc. Analysis

Common Questions About ROST (Consumer Cyclical)

Disclaimer: This content is for informational purposes only and does not constitute investment advice. Always do your own research and consult a financial advisor.

Official Resources