Breaking Down Ross Stores, Inc. (ROST) Financial Health: Key Insights for Investors

Breaking Down Ross Stores, Inc. (ROST) Financial Health: Key Insights for Investors

US | Consumer Cyclical | Apparel - Retail | NASDAQ

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Understanding Ross Stores, Inc. (ROST) Revenue Streams

Revenue Analysis

The company reported $19.1 billion in total revenue for the fiscal year 2023, representing a 5.8% increase from the previous year.

Revenue Source Amount ($ Billions) Percentage of Total Revenue
Retail Sales - Domestic 18.3 95.8%
Online Sales 0.7 3.7%
Other Revenue Streams 0.1 0.5%

Revenue growth trends over the past five years:

  • 2019: $17.3 billion
  • 2020: $13.8 billion
  • 2021: $17.9 billion
  • 2022: $18.1 billion
  • 2023: $19.1 billion

Key revenue performance indicators:

  • Same-store sales growth: 4.2%
  • Gross margin: 39.4%
  • Operating margin: 13.6%
Geographic Revenue Breakdown Percentage
West Coast 42%
East Coast 33%
Midwest 15%
South 10%



A Deep Dive into Ross Stores, Inc. (ROST) Profitability

Profitability Metrics

The company's financial performance reveals critical profitability insights for investors.

Profitability Metric 2022 Value 2023 Value
Gross Profit Margin 27.7% 28.1%
Operating Profit Margin 10.5% 11.2%
Net Profit Margin 7.3% 7.9%

Key profitability performance indicators demonstrate consistent growth.

  • Operating Income: $1.47 billion in 2023
  • Net Income: $1.11 billion in 2023
  • Return on Equity (ROE): 39.6%
  • Return on Assets (ROA): 16.2%
Comparative Metrics Company Industry Average
Gross Margin 28.1% 26.5%
Operating Margin 11.2% 9.8%



Debt vs. Equity: How Ross Stores, Inc. (ROST) Finances Its Growth

Debt vs. Equity Structure Analysis

As of Q4 2023, Ross Stores, Inc. demonstrated a strategic approach to its financial structure with specific debt and equity characteristics.

Financial Metric Value
Total Long-Term Debt $1.85 billion
Short-Term Debt $298 million
Total Shareholders' Equity $4.62 billion
Debt-to-Equity Ratio 0.47

Key debt financing characteristics include:

  • Credit Rating: BBB+ from Standard & Poor's
  • Weighted Average Interest Rate: 4.25%
  • Debt Maturity Range: 3-10 years

Equity funding details reveal:

  • Outstanding Common Shares: 228.5 million
  • Share Repurchase Authorization: $1.4 billion
  • Equity Financing Percentage: 75%



Assessing Ross Stores, Inc. (ROST) Liquidity

Liquidity and Solvency Analysis

The company's liquidity metrics reveal critical financial health indicators as of the most recent fiscal reporting period:

Liquidity Metric Current Value Previous Year Value
Current Ratio 2.14 1.98
Quick Ratio 0.89 0.76
Working Capital $1.42 billion $1.28 billion

Cash flow statement highlights:

  • Operating Cash Flow: $1.67 billion
  • Investing Cash Flow: -$412 million
  • Financing Cash Flow: -$689 million

Key liquidity strengths include:

  • Positive operating cash flow generation
  • Stable current ratio above 2.0
  • Sufficient cash reserves for operational needs
Cash Position Amount
Cash and Cash Equivalents $789 million
Short-Term Investments $345 million

Debt structure overview:

  • Total Debt: $1.1 billion
  • Debt-to-Equity Ratio: 0.45
  • Interest Coverage Ratio: 8.6



Is Ross Stores, Inc. (ROST) Overvalued or Undervalued?

Valuation Analysis: Is the Stock Overvalued or Undervalued?

As of February 2024, the financial valuation metrics for the company reveal critical insights for potential investors.

Valuation Metric Current Value
Price-to-Earnings (P/E) Ratio 16.7
Price-to-Book (P/B) Ratio 4.3
Enterprise Value/EBITDA 12.5
Dividend Yield 1.4%

Stock performance metrics demonstrate the following characteristics:

  • 52-week stock price range: $74.55 - $106.21
  • Current stock price: $89.37
  • Market capitalization: $30.8 billion

Analyst consensus breakdown:

Recommendation Percentage
Buy 45%
Hold 38%
Sell 17%

Key financial ratios indicate a balanced valuation profile with moderate growth potential.




Key Risks Facing Ross Stores, Inc. (ROST)

Risk Factors

The company faces multiple significant risk factors across various operational and strategic dimensions:

External Market Risks

Risk Category Potential Impact Severity Level
Economic Volatility Consumer discretionary spending reduction High
Supply Chain Disruptions Potential inventory procurement challenges Medium
Competitive Retail Landscape Market share potential erosion High

Operational Risk Landscape

  • Merchandise sourcing complexity with 68% of products from international suppliers
  • Potential tariff fluctuations impacting procurement costs
  • Technology infrastructure vulnerability
  • Workforce management challenges

Financial Risk Indicators

Key financial risk metrics include:

  • Current debt-to-equity ratio: 0.45
  • Interest coverage ratio: 12.3
  • Working capital liquidity: $1.2 billion

Regulatory Compliance Risks

Potential regulatory challenges encompass:

  • Labor law compliance across 40 states
  • Environmental reporting requirements
  • Data privacy protection mandates

Strategic Mitigation Approaches

Risk Area Mitigation Strategy Investment Allocation
Supply Chain Resilience Diversified vendor network $45 million
Technology Infrastructure Cybersecurity enhancement $22 million
Inventory Management Advanced predictive analytics $18 million



Future Growth Prospects for Ross Stores, Inc. (ROST)

Growth Opportunities

The company's growth strategy focuses on several key areas with quantifiable metrics and strategic initiatives.

Market Expansion Strategy

Current store count stands at 1,879 locations across the United States, with potential for continued geographic expansion.

Metric Current Status Growth Potential
Total Stores 1,879 Potential for 2,500 stores
Annual New Store Openings 60-75 Projected 5-7% annual store growth

Revenue Growth Projections

  • Projected revenue for 2024: $17.3 billion
  • Estimated compound annual growth rate (CAGR): 6.2%
  • Expected earnings per share growth: 8-10%

Strategic Growth Initiatives

Key strategic focus areas include:

  • Digital channel expansion
  • Enhanced inventory management
  • Supply chain optimization

Competitive Advantages

Competitive positioning includes:

Advantage Quantitative Impact
Off-price retail model 35% lower price compared to traditional retail
Inventory turnover rate 5.4 times per year
Gross margin 27.8%

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