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ROST trades against a final fair-value range of $120.88-$197.48, with the midpoint set by the accepted valuation synthesis rather than earlier draft model outputs. Fair value range: low $121, high $197, with mid-point at $159.
Stock analysis

ROST fair value $121–$197

By StockMarketAgent.AI team· supervised by
Analyzed: 2026-05-20Next update: 2026-08-20Methodology v2.4Data cut-off: Quality gate: passSources: all material sources passed deterministic freshness/provenance gatesReview: automatedArchetype: Mature compounder
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Last price
$217.71
▼ -58.78 (-27.00%)
Fair value
$159
$121–$197
Rating
Sell
confidence 82/100
Upside
-27.0%
upside to fair value
Margin of Safety
$135.09
MoS level · 15%
Market Cap
$70.4B
P/E fwd 26.5

§1 Executive summary

  • Composite fair value $159 with high case $197.
  • Implied downside of 27.0% to fair value.
  • Moat 6.5/10 · confidence 82/100 · Mature compounder.
  • Currently screens above fair value, so patience matters more than entry speed.
Fair value
$159
Margin of safety
-37.0%
Confidence
82/100
Moat
6.5/10

Educational analysis only — not financial advice. Always do your own due diligence.

$217.71Price
Low $120.88
Mid $158.93
High $197.48

ROST trades against a final fair-value range of $120.88-$197.48, with the midpoint set by the accepted valuation synthesis rather than earlier draft model outputs.

  • Scale economies in inventory sourcing
    Scale economies in inventory sourcing driving high ROIC (19.9%)
  • Off-price value proposition capturing trade-down
    Off-price value proposition capturing trade-down retail traffic
  • Cycle upside
    Consumers trading down to off-price retail during economic softening drives structural market share gains.

§2 Bear case

Macroeconomic pressure severely impacts the discretionary spending power of the core lower-to-middle income demographic. Compounded by supply chain and freight cost inflation, operating margins compress structurally below 12.26%, destroying the current high-multiple premium.

Ways this thesis can break

Severe Margin Compression

20%· Medium

Freight and supply chain costs compress operating margins structurally below historical averages, breaking the stable 12.26% margin thesis.

FV impact
High
Trigger
12-24 months

Valuation Multiple Deflation

60%· High

Market rerates the stock abruptly from current peak multiples (26.5x forward) to our normalized 20x terminal target, realizing immediate downside.

FV impact
High
Trigger
6-12 months

Unit Economics Saturation

10%· Low

Capex to D&A drops below 1.1x as market saturation limits new store expansion, breaking the 5-year growth path.

FV impact
Medium
Trigger
36-60 months
Early-warning signals to monitor
MetricCurrentTrigger threshold
Comparable store sales turn negative for two consecutive quarters.MonitorDeterioration versus the report thesis
ROIC drops below 15% due to inventory mismanagement or SG&A deleverage.MonitorDeterioration versus the report thesis
Capex to D&A falls below 1.1x without commensurate increase in repurchases.MonitorDeterioration versus the report thesis
Operating margins fail to hold the 12.26% baseline in quarterly reports.MonitorDeterioration versus the report thesis
Divergence expands between private calibration estimates and our $151-$152 DCF cluster.MonitorDeterioration versus the report thesis

§3 Financial history

Income statement — last six periods
Line itemT−0T−1T−2T−3T−4CAGR
Period2022-01-312023-01-312024-01-312025-01-312026-01-31Trend
Revenue$18.92B$18.70B$20.38B$21.13B$22.75B+4.7%
Gross profit$5.21B$4.75B$5.58B$5.87B$6.30B+4.9%
Operating income$2.33B$1.99B$2.31B$2.59B$2.71B+3.8%
Net income$1.72B$1.51B$1.87B$2.09B$2.15B+5.6%
EPS (diluted)$4.87$4.38$5.56$6.32$6.61+7.9%
EBITDA$2.69B$2.46B$2.97B$3.27B$3.39B+5.9%
R&D——————
SG&A$2.87B$2.76B$3.27B$3.28B$3.60B+5.8%

Quality scores

OCF / Net income
1.41×
>1 indicates high earnings quality
Accounting quality gate
Fail
Sector-adjusted gate
ROIC
20.0%
Return on invested capital
§3

Numbers analysis

Cash flow

Cash-flow quality is reflected in the OCFOperating cash flowCash generated from the company's core operations after working-capital changes but before capital expenditures. The first line of the cash-flow statement. / net incomeNet IncomeNet Income is an income-statement line item used to reconcile revenue to operating profit, pre-tax income, net income, or per-share earnings. It should be compared across periods and against peer disclosure conventions., accounting-quality, and ROICROICReturn on invested capital. Operating profit (after tax) divided by invested capital. The single best gauge of capital-efficiency. Spread over WACC = economic value created. rows above.

Capital allocation

Capital allocation should be evaluated against reinvestment needs, balance-sheet strength, and shareholder returns.

Individual subscribers — §4 onwards11 more sections

Read the full analysis — 11 more sections.

Competitive moat, industry cycle, peer comparison, intrinsic valuation, sensitivity, scenarios, earnings decision tree, position management, investor perspectives, scorecard, and final recommendation.

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MARGINS FAQ

ROST margins questions

  1. ROST (ROST)'s margin set covers gross margin, operating margin, net margin, and free-cash-flow margin. The five-year trajectory is plotted so the reader can separate cyclical noise from secular trend.

FAQ

ROST — frequently asked questions

  1. Based on our latest analysis, ROST looks meaningfully overvalued. The current price is $218 versus a composite fair-value midpoint of $159 (range $121–$197), which implies roughly 27.0% downside to the midpoint.

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