Ross Stores, Inc. (ROST)
Valuation Overview•Is Ross Stores, Inc. Overvalued or Undervalued?
Market price has outpaced base-case intrinsic cash flows, pricing in significant future growth optimism.
Moderate quality score of 72/100, reflecting stable operating margins and manageable leverage.
Analysts remain bullish, forecasting further upside expansion with consensus targets suggesting solid gains.
Verdict: Solid fundamental quality, though growth presents a headwind.
Wall Street is broadly bullish, projecting solid upside. This is paired with healthy capital returns, driven predominantly by aggressive share repurchases.
ROST demonstrates strong business quality with robust profitability and healthy margins (highlighted by a massive 30.6% ROIC). This is supported by a highly conservative balance sheet featuring strong liquidity and pristine Altman Z safety.
The company demonstrates solid revenue growth (6.8% 3Y CAGR) paired with robust earnings compounding (14.7% EPS 3Y CAGR). Operating efficiency remains adequate with margins around 12.2%.
| Financial Metric | Trend (12Q) | Latest Qtr | 1Y Growth | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|---|---|---|
| Revenue | $6.0B | +7.7% | +6.8% | +12.7% | +6.7% | |
| EBITDA | $870.9M | — | +14.5% | — | — | |
| Net Income | $650.0M | +2.6% | +12.4% | — | +7.7% | |
| EPS (Diluted) | $2.02 | +4.6% | +14.7% | +94.1% | +10.2% | |
| Free Cash Flow | $627.1M | +34.9% | +28.7% | +3.7% | — |
| Metric | TTM | 3Y Avg | 5Y Avg | 10Y Avg |
|---|---|---|---|---|
| Gross Margin | 28.3% | 27.7% | 27.2% | 27.2% |
| Operating Margin | 12.2% | 11.8% | 11.7% | 11.7% |
| Net Margin | 9.7% | 9.5% | 9.1% | 8.6% |
| FCF Margin | 11.1% | 8.7% | 7.6% | 9.3% |
| Quarter | EPS Est. | EPS Act. | Surprise | EPS | Rev |
|---|---|---|---|---|---|
| Q2'26Latest | $1.73 | $2.02 | +16.8% | ||
| Q1'26 | $1.90 | $2.00 | +5.3% | ||
| Q4'25 | $1.42 | $1.58 | +11.3% | ||
| Q3'25 | $1.53 | $1.56 | +2.0% | ||
| Q2'25 | $1.44 | $1.47 | +2.1% | ||
| Q1'25 | $1.66 | $1.79 | +7.8% | ||
| Q4'24 | $1.41 | $1.48 | +5.0% | ||
| Q3'24 | $1.50 | $1.59 | +6.0% |
Total return is +83.1% (1Y), outperforming the benchmark by +58.1%
| Period | Total Return | vs S&P 500 (Alpha) | Dividend Contribution |
|---|---|---|---|
| YTD | +27.9% | +18.6% | — |
| 1Y | +83.1% | +58.1% | +1.3% |
| 3YCAGR | +30.3% | +10.9% | +4.3% |
| 5YCAGR | +15.8% | +2.8% | +6.2% |
| 10YCAGR | +16.2% | +2.6% | — |
The S&P 500 is at 31.3x trailing P/E — Expensive relative to historical averages.
Quick answers to common questions about Ross Stores, Inc. (ROST) valuation, health, and returns.
Ross Stores, Inc. is estimated to be overvalued under our discounted cash flow framework. relative multiples indicate the stock is Fair versus peers compared to industry peers. overvalued (implying -39.7% downside from DCF intrinsic value of $140.30)
Ross Stores, Inc. has multiple valuation anchors: DCF Intrinsic Value: $140.30 | Peer Relative Fair Value: $242.90 | Wall Street Analyst Target: $259.89 (implying +11.6% upside). A convergence of these signals offers higher conviction.
Ross Stores, Inc. displays good financial health with a composite quality score of 72/100, supported by a Altman Z-Score of 7.2 (safe zone), Piotroski F-Score of 7/9, Return on Invested Capital (ROIC) of 30.6%.
Ross Stores, Inc. pays a 0.7% dividend yield, covered by a 25% payout ratio with 32 years of growth, supplemented by a 1.5% buyback yield.
Ross Stores, Inc.'s current growth trajectory is Stable. The company achieved +7.7% 1Y revenue growth and +4.6% 1Y EPS growth, compared to its 3Y revenue CAGR of +6.8%.
Wall Street consensus is Buy based on 47 analysts, beating EPS expectations in 100% of recent quarters with a 16-quarter streak. The consensus price target represents a +11.6% change from current levels.
Investment risks for Ross Stores, Inc. include: -7.8% 1-year max drawdown. Volatility risk is characterized by a beta of 0.69x.
No. These computations are purely quantitative model outputs for informational purposes. They do not account for qualitative management shifts or macro events. Always consult a licensed RIA before buying or selling shares.
Disclaimer: This page is for informational purposes only and does not constitute financial advice. All valuation models, scores, and target estimates are automated computations under stated assumptions and should not be relied upon as the sole basis for any investment decision.