ROST

We rate ROSS STORES, INC. (ROST) as a Buy with a composite score of 66.6/100 at a current price of $200.25. The stock scores above average across the majority of our six quantitative factors and ranks #208 out of 7,333 stocks in our universe, reflecting a favorable risk-reward profile.

The rating is primarily driven by strength in stability (90th percentile) and momentum (83th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (36th percentile) and value (55th percentile) tempers our overall conviction. We assign a Narrow Moat rating (53/100), Low uncertainty, and Exemplary capital allocation.

Key items to watch: quarterly earnings execution and sector-level competitive dynamics. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

ROSS STORES, INC. holds a top-quartile position (#10 of 50) within the Retail Trade sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 66.6/100 places it at rank #208 in our full 7,333-stock universe. With a $51.6B market capitalization, ROSS STORES, INC. operates at meaningful scale within the Retail Trade sector, providing competitive advantages in distribution, procurement, and customer reach.

The outlook is moderately positive, with revenue expanding at 14% and favorable momentum (83th percentile) reflecting constructive market sentiment. The business shows steady execution, though the growth rate is below the levels typically associated with high-conviction growth stories. Momentum confirmation provides support for the current price level.

The margin cascade tells an important story: gross margins of 28% (-8.1pp vs sector) narrow to operating margins of 12% (+8.5pp vs sector) and net margins of 9.6%, yielding a gross-to-net conversion rate of 34%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $200.25, ROSS STORES, INC. is trading near fair value based on current fundamentals. Our value factor score of 55/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 32.5x (a 52% premium to the sector median of 21.4x), EV/EBITDA of 25.7x (at a premium), P/B of 11.4x, P/S of 3.1x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis partially supports given strong quality metrics.

We assign a Low uncertainty rating to ROSS STORES, INC.. The company exhibits strong financial stability with a beta of 0.68, conservative leverage (26% D/E), and a stability factor in the 90th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

Specific risk factors that inform our assessment include: low beta of 0.68 — while defensive, this may indicate limited upside participation in bull markets. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 90th percentile and quality factor at the 63th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: conservative leverage (26% D/E) limits balance sheet risk; above-average stability (90th percentile) suggests predictable business dynamics; large-cap scale ($51.6B) provides resilience. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate ROSS STORES, INC.'s capital allocation as Exemplary. Management demonstrates a strong track record of balancing reinvestment with shareholder returns, evidenced by returns on equity of 34.9%, disciplined leverage (26% D/E). Exemplary allocators typically generate returns on equity above 20% while maintaining debt-to-equity below 50% — ROSS STORES, INC. meets this high bar.

The balance sheet remains conservatively managed, providing financial flexibility for opportunistic investments while maintaining a margin of safety for shareholders. The company returns capital via a 1.00% dividend yield, and the combination of 13.8% return on assets and controlled leverage suggests management is deploying capital at rates well above the cost of capital — the hallmark of exemplary stewardship.

In summary, ROSS STORES, INC. receives a Buy rating with a composite score of 66.6/100 (rank #208 of 7,333). Our quantitative framework assigns a Narrow Moat (53/100, trend: stable), Low uncertainty, and Exemplary capital allocation. The average factor score across quality, value, momentum, stability, and investment is 65/100.

Our analysis supports a constructive view on ROSS STORES, INC.. The combination of identifiable competitive advantages, low uncertainty, and exemplary capital allocation creates a risk-reward profile that favors accumulation at current levels. We recommend investors consider adding this name to portfolios aligned with the stock's risk profile.