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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.
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.
Freight and supply chain costs compress operating margins structurally below historical averages, breaking the stable 12.26% margin thesis.
Market rerates the stock abruptly from current peak multiples (26.5x forward) to our normalized 20x terminal target, realizing immediate downside.
Capex to D&A drops below 1.1x as market saturation limits new store expansion, breaking the 5-year growth path.
| Line item | 2022-01-31 | 2023-01-31 | 2024-01-31 | 2025-01-31 | 2026-01-31 | Trend |
|---|---|---|---|---|---|---|
| Revenue | $18.92B | $18.70B-1.2% | $20.38B+9.0% | $21.13B+3.7% | $22.75B+7.7% | +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-12.2% | $1.87B+23.8% | $2.09B+11.8% | $2.15B+2.9% | +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% |
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 should be evaluated against reinvestment needs, balance-sheet strength, and shareholder returns.
| Deterioration versus the report thesis |
| Operating margins fail to hold the 12.26% baseline in quarterly reports. | Monitor | Deterioration versus the report thesis |
| Divergence expands between private calibration estimates and our $151-$152 DCF cluster. | Monitor | Deterioration versus the report thesis |
