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.
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 Caso bajista
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.
Cómo puede fallar esta tesis
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
Señales de alerta temprana a vigilar
Métrica
Actual
Umbral de activación
Comparable store sales turn negative for two consecutive quarters.
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Deterioration versus the report thesis
ROIC drops below 15% due to inventory mismanagement or SG&A deleverage.
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Deterioration versus the report thesis
Capex to D&A falls below 1.1x without commensurate increase in repurchases.
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Deterioration versus the report thesis
Operating margins fail to hold the 12.26% baseline in quarterly reports.
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Deterioration versus the report thesis
Divergence expands between private calibration estimates and our $151-$152 DCF cluster.
ROST (ROST)'s intrinsic value is triangulated from discounted earnings at two cost-of-equity levels (strict CAPM with raw beta, moderate with adjusted beta), with owner earnings used as a floor for high-growth names.
Each model produces a per-share value; the composite range comes from a weighted blend driven by the archetype's model-applicability matrix. Cost of equity, terminal growth, and the deceleration curve are documented in the assumption ledger.
EPS-based models are discounted at cost of equity; FCFF models use WACC and then subtract net debt to bridge enterprise value to equity value. Each model is labelled with its discount-rate convention so the reader can verify the bridge.
Owner earnings (Buffett's definition) is net income plus depreciation and amortization minus maintenance capex. We do not subtract stock-based compensation again because net income already includes it; dilution is tracked separately via share-count growth.
FAQ
ROST — frequently asked questions
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.
Our composite fair-value range for ROST is $121–$197, with a midpoint of $159. The range is triangulated across multiple valuation models (discounted earnings, forward earnings scenarios, peer multiples, and where applicable owner earnings or reverse DCF) and weighted by reliability for ROST's archetype.
Our current rating for ROST is Sell with a confidence score of 82/100. ROST is rated Sell at $217.71 versus the reconciled fair value midpoint of $158.93, implying -27.00% upside/downside. Confidence is separately disclosed at 82/100. This is research for educational purposes, not personalized investment advice.
The top risks our latest report flags for ROST are: Severe Margin Compression; Valuation Multiple Deflation; Unit Economics Saturation. The single biggest risk is Severe Margin Compression: Freight and supply chain costs compress operating margins structurally below historical averages, breaking the stable 12.26% margin thesis.
Our current rating for ROST is Sell, issued with a confidence score of 82/100 and a moat score of 6.5/10. The rating reflects the composite fair-value range ($121–$197) versus the current price of $218.
ROST is classified as a mature compounder stock. Archetype determines how every downstream parameter — discount rate, terminal growth, deceleration curve, terminal multiple, scenario probability weights, scorecard weights, and which valuation models are prioritized — is calibrated for ROST.
