Ross Stores, Inc. (ROST)

ROSS Business model flourishes in recessive economic cycles. It takes advantage of the low cost for merchandise they can negotiate with their vendors and their customers flock to ROSS to buy merchandise at these bargain prices. The Holiday season will be especially good for ROSS as customers try to spend money wisely during these tough economic times.

continued upward revisions in eps. positive independent ratings. one of the best apparel stores. below industry PE and PEG. good margin control. pays a 1% div and has been increasing the yield for 14 concecutive years.

Shopping for discounts, just like everyone else.

People wlll move to buy clothes at these types of stores.

Ross is a discount store .The economy is bearish the consumer is cutting back so therefor shop at discount store and Ross is the best.

Biglots is great also

Undervalued and consistently strong upward earnings trend YTD

E2008-08-20 Great store, good financials, rising sales, rising earnings. But it's all out there with the lastest announcement. Just room for some bad news somewhere down the line in the next few weeks. So I'll short it.

Ross Stores have a fantastic business model and will weather the storm ahead. However, expectations that they will weather the storm have taken over rational economics and allowed their stock price to increase as if we were currently in a bull market. Fundamentals completely debase what I agree is a compelling three month technical chart. But it is not so compelling if you back up the truck. A five year chart reveals a mountain range and we are currently at the summit of the largest of these individual mountains.

Let's pull up some stats. Cash and short term investments on the balance sheet is down 25% from the same period in 2007 and projected to remain down 25% in YOY comparison. Cash flow likewise is estimated to be below both 2006 and 2007 numbers. EPS over the past five years is 8.7% with Revenue at 11.09%. These numbers aren't bad, but they should not be commanding a stock price that is currently up 50% in the same period (in which the S&P is down 25%) with dark thunder clouds clearly ahead for retail. Maybe this is why Insiders have sold 275K shares in the past six months.

From a valuation perspective they offer a dividend slightly above the industry average which could be enticing since they have a decent cash position to support it. What scares me, however, is that it has increased by 25.49% over the past 12 months. That in my humble opinion is not sustainable in the current economic environment. Then again, they are playing catch-up in this area as the dividend growth rate over the past three years is actually 10% below the industry average. (so theoretically if they can hold the divvy steady that will probably allow them to move ahead of the industry average as weaker competitors are forced to cut dividends substantially or altogether).

Their debt to capital ratio is one of the lowest in the industry--this is spectacular. HOWEVER, their quick ratio is 0.42. This is scary. That means they do not have enough liquid assets to cover liabilities in the event that earnings are not able to sustain themselves. Just to give you an idea of just how bad that is, the industry average is 1.08x liabilities.

What is most worrisome to me right now is that ROST's profit margins are all (gross, operating, and net) about 25% below the industry average. That means they are making less on each dollar of sales compared to the industry. (keep in mind that the industry average includes companies like Walmart--which obviously skews the numbers, but not so much that ROST should have a price that is relatively STRONGER than WMT in the current environment).

Bottomline: Ross usually does quite well this time of year because college students have to go buy suits and ties and skirts etc... This explains the extremely predictable hills and values in the 5 year stock chart. But with a PE of 18.43 (high given the current eco. environment) and a price to book of 5x I think Ross is very expensive right now.

This stock was picked by TMFSchool in the 2008 TMF Stockpicking Contest.

we all want nioce things but with the available money fallling we are more willing to hunt for those things

Just beaten down...seems to follow a seasonal trend....we'll see.

Retailers like Ross will do well over the long run thanks to their competitive advantage.

Long-term underperform. Poorly managed. Price and P/E on the high side.

It is currently over valued for the revenue it generates.

Ross is ready to make a bold and properous move for investors. With continued healthy growth for same store profits and a large increase in new store openings this year Ross looks like a winner for years to come

This off-price clothing and household goods retailer has good numbers - ROE, ROA, margins, cash, debt, growth, etc. And it is not expensive (or inexpensive). The main reason I rate is as Outperform is that it and TJX are the only places I can shop for the same combination of quality and price. So, if consumers keep spending, they'll keep growing.

Sales are up. New stores are opening.

Ross Stores, Inc. is the second largest off-price retailer in US with 772 stores nationwide. The company offers branded apparel, accessories, footwear, and home fashions for men and women in the age group of 25-54 years belonging to the low-income group. Ross Stores sells products at low rates; it offers a discount of 20% to 60% on department and specialty store regular prices.

The company has maximum stores in California, Texas, and Florida. Moreover, in these markets, the company also enjoys an edge over its major competitors, TJX Companies and Gottschalk, in terms of the number of stores. In addition, to increase its dominance in these markets, Ross recently acquired 46 Albertsons locations in California, Florida, Texas, Arizona, Colorado, and Oklahoma. Growing organically in developed markets is difficult owing to space constraints and hence, Ross has taken a good strategic move to acquire Albertsons to increase its foothold in these markets.

With same store sales being positive since February 2005, the company wants to open additional stores in the existing regions to increase its market penetration and sales. Additionally, sales for the off-price sector grew by 11.3% during 2005, which is significantly faster than total national apparel sales, which grew by 3.6%; this augurs better prospects for the company. The company would experience upswing in margins too, in future, from the recently adopted better micro-merchandising and streamlining supply chain management through distribution center efficiencies.

Owing to softness in the industry and looking at November sales data, there will be stiff competition in this holiday season with big giants like Wal-Mart and Target going for more aggressive pricing. Despite expected slack holiday season, this off-price retailer’s performance would not be affected and should be a good buy.

Looks like it's near the top pf its cycle