Ross Stores Inc Valuation – January 2019 $ROST

Company Profile (excerpt from Reuters): Ross Stores, Inc., incorporated on March 29, 1989, and its subsidiaries operate two brands of off-price retail apparel and home fashion stores-Ross Dress for Less (Ross) and dd’s DISCOUNTS. The Company is the off-price apparel and home fashion chain in the United States, with 1,340 locations in 36 states, the District of Columbia and Guam, as of January 28, 2017. The Company offers in-season, name brand and designer apparel, accessories, footwear, and home fashions for the entire family at savings of 20% to 60% off department and specialty store regular prices every day. The Company also operated 193 dd’s DISCOUNTS stores in 15 states as of January 28, 2017.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ROST – January 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $30,957,153,472 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.61 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 202.02% Pass
6. Moderate PEmg Ratio PEmg < 20 24.85 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 9.72 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.61 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.23 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.36
MG Growth Estimate 11.90%
MG Value $108.54
Opinion Fairly Valued
MG Grade B
MG Value based on 3% Growth $48.74
MG Value based on 0% Growth $28.57
Market Implied Growth Rate 8.18%
Current Price $83.53
% of Intrinsic Value 76.96%

Ross Stores, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PEmg and PB ratios. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $1.87 in 2015 to an estimated $3.36 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 8.18% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Ross Stores, Inc. revealed the company was trading above its Graham Number of $27.22. The company pays a dividend of $0.64 per share, for a yield of 0.8% Its PEmg (price over earnings per share – ModernGraham) was 24.85, which was below the industry average of 25.4, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $1.55.

Ross Stores, Inc. performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $1.55
Graham Number $27.22
PEmg 24.85
Current Ratio 1.61
PB Ratio 9.72
Current Dividend $0.64
Dividend Yield 0.77%
Number of Consecutive Years of Dividend Growth 20

Useful Links:

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Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 10/1/2018
Total Current Assets $3,623,307,000
Total Current Liabilities $2,252,294,000
Long-Term Debt $312,328,000
Total Assets $6,235,767,000
Intangible Assets $0
Total Liabilities $3,048,604,000
Shares Outstanding (Diluted Average) 371,061,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.10
Jan2018 $3.55
Jan2017 $2.83
Jan2016 $2.51
Jan2015 $2.21
Jan2014 $1.94
Jan2013 $1.77
Jan2012 $1.43
Jan2011 $1.16
Jan2010 $0.89
Jan2009 $0.58
Jan2008 $0.48
Jan2007 $0.43
Jan2006 $0.34
Jan2005 $0.28
Jan2004 $0.37
Jan2003 $0.31
Jan2002 $0.24
Jan2001 $0.23
Jan2000 $0.21
Jan1999 $0.18

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.36
Jan2018 $2.86
Jan2017 $2.43
Jan2016 $2.14
Jan2015 $1.87
Jan2014 $1.62
Jan2013 $1.36
Jan2012 $1.07
Jan2011 $0.83
Jan2010 $0.62
Jan2009 $0.47
Jan2008 $0.40
Jan2007 $0.36
Jan2006 $0.32
Jan2005 $0.30
Jan2004 $0.30
Jan2003 $0.25

Recommended Reading:

Other ModernGraham posts about the company

Best Dividend Paying Stocks for Dividend Growth Investors – August 2018
Best Dividend Paying Stocks for Dividend Growth Investors – June 2018
Best Dividend Paying Stocks for Dividend Growth Investors – April 2018
Ross Stores Inc Valuation – March 2018 $ROST
Best Dividend Paying Stocks for Dividend Growth Investors – August 2017

Other ModernGraham posts about related companies

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Nordstrom Inc Valuation – December 2018 $JWN
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Canadian Tire Corp Ltd Valuation – August 2018 $TSE:CTC.A
McKesson Corp Valuation – June 2018 $MCK
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Costco Wholesale Corp Valuation – June 2018 $COST
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Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Cullen/Frost Bankers Inc Valuation – July 2018 $CFR

Company Profile (excerpt from Reuters): Cullen/Frost Bankers, Inc., incorporated on January 25, 1966, is a financial holding company and a bank holding company. The Company, through its subsidiaries, provides a range of products and services throughout Texas markets. The Company’s segments include Banking, Frost Wealth Advisors and Non-Banks. The Banking segment includes both commercial and consumer banking services, and Frost Insurance Agency. Commercial banking services are provided to corporations and other business clients and include a range of lending and cash management products. Consumer banking services include direct lending and depository services. Frost Insurance Agency provides insurance brokerage services to individuals and businesses covering corporate and personal property and casualty products, as well as group health and life insurance products and human resources consulting services. The Frost Wealth Advisors segment includes fee-based services within private trust, retirement services, and financial management services, including personal wealth management and securities brokerage services. The Non-Banks segment includes the direct and indirect ownership of its banking and non-banking subsidiaries and the issuance of debt and equity.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CFR – July 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $7,231,845,441 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 66.93% Pass
5. Moderate PEmg Ratio PEmg < 20 21.01 Fail
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.27 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $5.42
MG Growth Estimate 5.74%
MG Value $108.23
Opinion Fairly Valued
MG Grade B-
MG Value based on 3% Growth $78.53
MG Value based on 0% Growth $46.04
Market Implied Growth Rate 6.25%
Current Price $113.78
% of Intrinsic Value 105.12%

Cullen/Frost Bankers, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the high PEmg ratio. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $3.92 in 2014 to an estimated $5.42 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 6.25% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Cullen/Frost Bankers, Inc. revealed the company was trading above its Graham Number of $84.91. The company pays a dividend of $2.25 per share, for a yield of 2% Its PEmg (price over earnings per share – ModernGraham) was 21.01, which was above the industry average of 20.05.

Cullen/Frost Bankers, Inc. performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Graham Number $84.91
PEmg 21.01
PB Ratio 2.27
Dividend Yield 1.98%
TTM Dividend $2.25
Number of Consecutive Years of Dividend Growth 20

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Long-Term Debt & Capital Lease Obligation $234,789,000
Total Assets $31,459,232,000
Intangible Assets $659,637,000
Total Liabilities $28,215,802,000
Shares Outstanding (Diluted Average) 64,662,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $6.45
Dec2017 $5.51
Dec2016 $4.70
Dec2015 $4.28
Dec2014 $4.29
Dec2013 $3.80
Dec2012 $3.86
Dec2011 $3.54
Dec2010 $3.44
Dec2009 $3.00
Dec2008 $3.50
Dec2007 $3.55
Dec2006 $3.42
Dec2005 $3.07
Dec2004 $2.66
Dec2003 $2.48
Dec2002 $2.29
Dec2001 $1.57
Dec2000 $2.03
Dec1999 $1.78
Dec1998 $1.38

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.42
Dec2017 $4.77
Dec2016 $4.33
Dec2015 $4.08
Dec2014 $3.92
Dec2013 $3.66
Dec2012 $3.55
Dec2011 $3.40
Dec2010 $3.35
Dec2009 $3.30
Dec2008 $3.38
Dec2007 $3.23
Dec2006 $2.97
Dec2005 $2.64
Dec2004 $2.35
Dec2003 $2.14
Dec2002 $1.92

Recommended Reading:

Other ModernGraham posts about the company

Cullen/Frost Bankers Inc Valuation – Initial Coverage $CFR

Other ModernGraham posts about related companies

Wells Fargo & Co Valuation – June 2018 $WFC
SunTrust Banks Inc Valuation – June 2018 $STI
Comerica Inc Valuation – June 2018 $CMA
SVB Financial Group Valuation – June 2018 $SIVB
US Bancorp Valuation – May 2018 $USB
Bank of New York Mellon Corp Valuation – May 2018 $BK
Citizens Financial Group Inc Valuation – April 2018 $CFG
BB&T Corporation Valuation – April 2018 $BBT
M&T Bank Corp Valuation – April 2018 $MTB
Bank of America Corp Valuation – March 2018 $BAC

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Ross Stores Inc Valuation – March 2018 $ROST

Company Profile (obtained from Marketwatch): Ross Stores, Inc. engages in the operation of off-price retail apparel and home accessories stores. Its products include branded and designer apparel, accessories, footwear, and home fashions through the Dress for Less and dd’s DISCOUNTS brands. The company was founded by Stuart G. Moldaw in 1957 and is headquartered in Dublin, CA.

ROST Chart

ROST data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ROST – March 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $29,841,778,569 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.57 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 227.87% Pass
6. Moderate PEmg Ratio PEmg < 20 28.22 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 10.44 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.57 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.34 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.77
MG Growth Estimate 10.68%
MG Value $82.64
Opinion Fairly Valued
MG Grade B
MG Value based on 3% Growth $40.13
MG Value based on 0% Growth $23.52
Market Implied Growth Rate 9.86%
Current Price $78.09
% of Intrinsic Value 94.49%

Ross Stores, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PEmg and PB ratios. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $1.62 in 2014 to an estimated $2.77 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 9.86% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Ross Stores, Inc. revealed the company was trading above its Graham Number of $22.68. The company pays a dividend of $0.54 per share, for a yield of 0.7% Its PEmg (price over earnings per share – ModernGraham) was 28.22, which was below the industry average of 48.5, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $0.86.

Ross Stores, Inc. performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $0.86
Graham Number $22.68
PEmg 28.22
Current Ratio 1.57
PB Ratio 10.44
Current Dividend $0.54
Dividend Yield 0.69%
Number of Consecutive Years of Dividend Growth 20

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 10/1/2017
Total Current Assets $3,235,945,000
Total Current Liabilities $2,056,242,000
Long-Term Debt $396,848,000
Total Assets $5,766,978,000
Intangible Assets $0
Total Liabilities $2,908,459,000
Shares Outstanding (Diluted Average) 382,132,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.26
Jan2017 $2.83
Jan2016 $2.51
Jan2015 $2.21
Jan2014 $1.94
Jan2013 $1.77
Jan2012 $1.43
Jan2011 $1.16
Jan2010 $0.89
Jan2009 $0.58
Jan2008 $0.48
Jan2007 $0.43
Jan2006 $0.34
Jan2005 $0.28
Jan2004 $0.37
Jan2003 $0.31
Jan2002 $0.24
Jan2001 $0.23
Jan2000 $0.21
Jan1999 $0.18
Jan1998 $0.15

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.77
Jan2017 $2.43
Jan2016 $2.14
Jan2015 $1.87
Jan2014 $1.62
Jan2013 $1.36
Jan2012 $1.07
Jan2011 $0.83
Jan2010 $0.62
Jan2009 $0.47
Jan2008 $0.40
Jan2007 $0.36
Jan2006 $0.32
Jan2005 $0.30
Jan2004 $0.30
Jan2003 $0.25
Jan2002 $0.21

Recommended Reading:

Other ModernGraham posts about the company

Best Dividend Paying Stocks for Dividend Growth Investors – August 2017
Best Dividend Paying Stocks for Dividend Growth Investors – March 2017
Best Dividend Paying Stocks for Dividend Growth Investors – February 2017
Best Dividend Paying Stocks for Dividend Growth Investors – January 2017
Best Dividend Paying Stocks for Dividend Growth Investors – December 2016

Other ModernGraham posts about related companies

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Costco Wholesale Corp Valuation – September 2017 $COST
McKesson Corp Valuation – August 2017 $MCK
Big 5 Sporting Goods Corp Valuation – Initial Coverage $BGFV
Amazon.com Inc Valuation – August 2017 $AMZN
Fossil Group Inc Valuation – March 2017 $FOSL
Lumber Liquidators Holdings Inc Valuation – Initial Coverage $LL
CVS Health Corp Valuation – March 2017 $CVS
Target Corp Valuation – March 2017 $TGT

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Cullen/Frost Bankers Inc Valuation – Initial Coverage $CFR

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – August 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Cullen/Frost Bankers Inc (CFR) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Cullen/Frost Bankers, Inc. is a financial holding and bank holding company. The Company, through its subsidiaries, offers commercial and consumer banking services, as well as trust and investment management, insurance, brokerage, mutual funds, leasing, treasury management, capital markets advisory and item processing services. It serves various industries, such as energy, manufacturing, services, construction and retail. It operates through two segments, which include Banking and Frost Wealth Advisors. Its Banking segment includes both commercial and consumer banking services, Frost Insurance Agency and Frost Securities. Its Banking segment offers commercial banking services, such as lending and cash management products to corporations and other business clients. Its Frost Wealth Advisors segment includes fee-based services within private trust, retirement services and financial management services, including personal wealth management and securities brokerage services.

CFR Chart

CFR data by YCharts

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Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of CFR – December 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $5,560,311,623 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 30.15% Fail
5. Moderate PEmg Ratio PEmg < 20 20.26 Fail
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.73 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $4.27
MG Growth Estimate 3.02%
MG Value $62.02
Opinion Overvalued
MG Grade B-
MG Value based on 3% Growth $61.87
MG Value based on 0% Growth $36.27
Market Implied Growth Rate 5.88%
Current Price $86.46
% of Intrinsic Value 139.41%

Cullen/Frost Bankers, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings growth over the last ten years, and the high PEmg ratio. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $3.55 in 2012 to an estimated $4.27 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.88% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Cullen/Frost Bankers, Inc. revealed the company was trading above its Graham Number of $69.78. The company pays a dividend of $2.14 per share, for a yield of 2.5%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 20.26, which was above the industry average of 13.43.

Cullen/Frost Bankers, Inc. performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Graham Number $69.78
PEmg 20.26
PB Ratio 1.73
Dividend Yield 2.48%
TTM Dividend $2.14
Number of Consecutive Years of Dividend Growth 20

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2016
Long-Term Debt & Capital Lease Obligation $236,072,000
Total Assets $29,602,912,000
Intangible Assets $661,599,000
Total Liabilities $26,441,116,000
Shares Outstanding (Diluted Average) 63,141,000

Earnings Per Share History

Next Fiscal Year Estimate $4.51
Dec2015 $4.28
Dec2014 $4.29
Dec2013 $3.80
Dec2012 $3.86
Dec2011 $3.54
Dec2010 $3.44
Dec2009 $3.00
Dec2008 $3.50
Dec2007 $3.55
Dec2006 $3.42
Dec2005 $3.07
Dec2004 $2.66
Dec2003 $2.48
Dec2002 $2.29
Dec2001 $1.57
Dec2000 $2.03
Dec1999 $1.78
Dec1998 $1.38
Dec1997 $1.34
Dec1996 $1.16

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $4.27
Dec2015 $4.08
Dec2014 $3.92
Dec2013 $3.66
Dec2012 $3.55
Dec2011 $3.40
Dec2010 $3.35
Dec2009 $3.30
Dec2008 $3.38
Dec2007 $3.23
Dec2006 $2.97
Dec2005 $2.64
Dec2004 $2.35
Dec2003 $2.14
Dec2002 $1.92
Dec2001 $1.69
Dec2000 $1.68

Recommended Reading:

Other ModernGraham posts about the company

None.  This is the first time ModernGraham has covered the company.

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Bank of New York Mellon Corp Valuation – August 2016 $BK
Best Stocks to Invest In: the Bank Industry – August 2016
JPMorgan Chase & Co Valuation – July 2016 $JPM
Dominion Resources Inc Valuation – July 2016 $D

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Ross Stores Inc Valuation – June 2016 $ROST

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – March 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Ross Stores Inc (ROST) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Ross Stores, Inc. is an off-price retailer of name brand and designer apparel, accessories, footwear, and home fashions for the entire family. The Company and its subsidiaries operate two brands of off-price retail apparel and home fashion stores: Ross Dress for Less (Ross) and dd’s DISCOUNTS. Ross is an off-price apparel and home fashion chain in the United States, with approximately 1,274 locations in over 34 states, the District of Columbia and Guam. Ross’ target customers are primarily from middle income households. The Company operates approximately 172 dd’s DISCOUNTS stores in over 15 states. Both Ross and dd’s DISCOUNTS brands target value-conscious women and men between the ages of 18 and 54. The Company owns and operates approximately six distribution processing facilities, including three in California, one in Pennsylvania, and two in South Carolina.

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To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
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Downloadable PDF version of this valuation:

ModernGraham Valuation of ROST – June 2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $21,892,914,341 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.50 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 275.55% Pass
6. Moderate PEmg Ratio PEmg < 20 23.37 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 8.61 Fail
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.50 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.45 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

ROST value chart June 2016

EPSmg $2.35
MG Growth Estimate 10.92%
MG Value $71.19
Opinion Fairly Valued
MG Grade B
MG Value based on 3% Growth $34.03
MG Value based on 0% Growth $19.95
Market Implied Growth Rate 7.44%
Current Price $54.85
% of Intrinsic Value 77.05%

Ross Stores, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PEmg and PB ratios. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $1.36 in 2013 to an estimated $2.35 for 2017. This level of demonstrated earnings growth supports the market’s implied estimate of 7.44% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

Ross Stores, Inc. performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

ROST charts June 2016

Net Current Asset Value (NCAV) $0.14
Graham Number $19.15
PEmg 23.37
Current Ratio 1.50
PB Ratio 8.61
Current Dividend $0.49
Dividend Yield 0.89%
Number of Consecutive Years of Dividend Growth 20

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 4/1/2016
Total Current Assets $2,629,123,000
Total Current Liabilities $1,750,896,000
Long-Term Debt $396,142,000
Total Assets $5,114,177,000
Intangible Assets $0
Total Liabilities $2,574,736,000
Shares Outstanding (Diluted Average) 398,812,000

Earnings Per Share History

Next Fiscal Year Estimate $2.58
Jan2016 $2.51
Jan2015 $2.21
Jan2014 $1.94
Jan2013 $1.77
Jan2012 $1.43
Jan2011 $1.16
Jan2010 $0.89
Jan2009 $0.58
Jan2008 $0.48
Jan2007 $0.43
Jan2006 $0.34
Jan2005 $0.28
Jan2004 $0.37
Jan2003 $0.32
Jan2002 $0.24
Jan2001 $0.23
Jan2000 $0.21
Jan1999 $0.18
Jan1998 $0.15
Jan1997 $0.10

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.35
Jan2016 $2.14
Jan2015 $1.87
Jan2014 $1.62
Jan2013 $1.36
Jan2012 $1.07
Jan2011 $0.83
Jan2010 $0.62
Jan2009 $0.47
Jan2008 $0.40
Jan2007 $0.36
Jan2006 $0.32
Jan2005 $0.30
Jan2004 $0.30
Jan2003 $0.25
Jan2002 $0.21
Jan2001 $0.19

Recommended Reading:

Other ModernGraham posts about the company

Dividend Growth Stocks for Intelligent Investors – February 2016
13 Best Stocks For Value Investors This Week – 12/12/15
Ross Stores Inc Valuation – December 2015 Update $ROST
Dividend Growth Stocks for the Intelligent Investor – November 2015
Dividend Growth Stocks for the Intelligent Investor – October 2015

Other ModernGraham posts about related companies

Bed Bath & Beyond Inc Valuation – June 2016 $BBBY
Wal-Mart Stores Inc Valuation – May 2016 $WMT
Aaron’s Inc Valuation – May 2016 $AAN
Nordstrom Inc Valuation – May 2016 $JWN
Tractor Supply Company Valuation – May 2016 $TSCO
Fossil Group Inc Stock Valuation – February 2016 $FOSL
TJX Companies Inc Valuation – February 2016 Update $TJX
Coach Inc Valuation – February 2016 Update $COH
Tiffany & Company Valuation – February 2016 Update $TIF
Urban Outfitters Inc Valuation – January 2016 Update $URBN

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Ross Stores Inc Valuation – December 2015 Update $ROST

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – November 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Ross Stores Inc (ROST) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Ross Stores, Inc. is an off-price retailer of name brand and designer apparel, accessories, footwear, and home fashions for the entire family. The Company operates two brands of off-price retail apparel and home fashion stores, Ross Dress for Less (Ross) and dd’s DISCOUNTS. As of December 31, 2014, the Company operated 1,210 Ross locations in 33 states, the District of Columbia and Guam, and 152 dd’s DISCOUNTS stores in 15 states. The Ross and dd’s DISCOUNTS stores are supported by five distribution centers. The Ross brand stores offers its products at savings of 20% to 60% off department and specialty store regular prices every day. Ross’ target customers are primarily from middle income households. The dd’s DISCOUNTS stores offers its products at savings of 20% to 70% off moderate department and discount store regular prices every day. Its target customers typically come from households with moderate incomes.

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To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of ROST – December 2015

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $22,019,751,313 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.39 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 346.06% Pass
6. Moderate PEmg Ratio PEmg < 20 25.46 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 9.16 Fail
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.39 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.58 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

ROST value Chart December 2015

EPSmg $2.13
MG Growth Estimate 14.83%
MG Value $81.25
Opinion Undervalued
MG Value based on 3% Growth $30.88
MG Value based on 0% Growth $18.10
Market Implied Growth Rate 8.48%
Current Price $54.22
% of Intrinsic Value 66.73%

Ross Stores Inc qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the low current ratio and the high PEmg and PB ratios.  The Enterprising Investor is only initially concerned by the low current ratio. As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $1.07 in 2012 to an estimated $2.13 for 2016.  This level of demonstrated earnings growth outpaces the market’s implied estimate of 8.48% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Ross Stores Inc (ROST)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

ROST Charts December 2015

Net Current Asset Value (NCAV) -$0.19
Graham Number $18.04
PEmg 25.46
Current Ratio 1.39
PB Ratio 9.16
Dividend Yield 0.84%
Number of Consecutive Years of Dividend Growth 20

 

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information Oct15
Total Current Assets $2,434,590,000
Total Current Liabilities $1,749,479,000
Long-Term Debt $395,909,000
Total Assets $4,903,771,000
Intangible Assets $0
Total Liabilities $2,509,689,000
Shares Outstanding (Diluted Average) 404,504,000

Earnings Per Share History

Next Fiscal Year Estimate $2.47
Jan15 $2.21
Jan14 $1.94
Jan13 $1.77
Jan12 $1.43
Jan11 $1.16
Jan10 $0.89
Jan09 $0.58
Jan08 $0.48
Jan07 $0.43
Jan06 $0.34
Jan05 $0.28
Jan04 $0.37
Jan03 $0.31
Jan02 $0.24
Jan01 $0.23
Jan00 $0.21
Jan99 $0.18
Jan98 $0.15
Jan97 $0.10
Jan96 $0.06

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.13
Jan15 $1.87
Jan14 $1.62
Jan13 $1.36
Jan12 $1.07
Jan11 $0.83
Jan10 $0.62
Jan09 $0.47
Jan08 $0.40
Jan07 $0.36
Jan06 $0.32
Jan05 $0.30
Jan04 $0.30
Jan03 $0.25
Jan02 $0.21
Jan01 $0.19
Jan00 $0.16

Recommended Reading:

Other ModernGraham posts about the company

Dividend Growth Stocks for the Intelligent Investor – November 2015
Dividend Growth Stocks for the Intelligent Investor – October 2015
Dividend Growth Stocks for the Intelligent Investor – September 2015
19 Best Stocks For Value Investors This Week – 8/29/15
Ross Stores Inc. Analysis – August 2015 Update $ROST

Other ModernGraham posts about related companies

Bed Bath & Beyond Inc. Valuation – November 2015 Update $BBBY
Kohl’s Corporation Valuation – November 2015 Update $KSS
Aaron’s Inc. Valuation – October 2015 Update $AAN
Nordstrom Inc. Valuation – October 2015 Update $JWN
Tractor Supply Company Valuation – October 2015 Update $TSCO
Coach Inc. Valuation – October 2015 Update $COH
Dollar Tree Stores Inc. Valuation – October 2015 Update $DLTR
TJX Companies Inc. Valuation – October 2015 Update $TJX
TJX Companies Inc. Valuation – October 2015 Update $TJX
Tiffany and Company Valuation – October 2015 Update $TIF

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Ross Stores Inc. Analysis – August 2015 Update $ROST

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – August 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Ross Stores Inc. (ROST) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Ross Stores, Inc. is an off-price retailer of name brand and designer apparel, accessories, footwear, and home fashions for the entire family. The Company operates two brands of off-price retail apparel and home fashion stores, Ross Dress for Less (Ross) and dd’s DISCOUNTS. As of December 31, 2014, the Company operated 1,210 Ross locations in 33 states, the District of Columbia and Guam, and 152 dd’s DISCOUNTS stores in 15 states. The Ross and dd’s DISCOUNTS stores are supported by five distribution centers. The Ross brand stores offers its products at savings of 20% to 60% off department and specialty store regular prices every day. Ross’ target customers are primarily from middle income households. The dd’s DISCOUNTS stores offers its products at savings of 20% to 70% off moderate department and discount store regular prices every day. Its target customers typically come from households with moderate incomes.

[level-free]

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[level-mg-stocks-screens-subscriber]

Downloadable PDF version of this valuation:

ModernGraham Valuation of ROST

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end Pass
6. Moderate PEmg Ratio PEmg < 20 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 Fail
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg 2.11
MG Growth Estimate 14.62%
MG Value $79.79
Opinion Undervalued
MG Value based on 3% Growth $30.66
MG Value based on 0% Growth $17.97
Market Implied Growth Rate 7.57%
Current Price $50.00
% of Intrinsic Value 62.67%

Ross Stores Inc. qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the low current ratio and the high PEmg and PB ratios.  The Enterprising Investor is only initially concerned with the low current ratio.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $1.07 in 2012 to an estimated $2.11 for 2016.  This level of demonstrated earnings growth outpaces the market’s implied estimate of 7.57% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Ross Stores Inc. (ROST)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

ROST Charts - August 2015

Net Current Asset Value (NCAV) -$0.28
PEmg 23.64
Current Ratio 1.36
PB Ratio 8.81
Dividend Yield 0.84%
Number of Consecutive Years of Dividend Growth 20

 

[/level-mg-stocks-screens-subscriber]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Total Current Assets $2,486,366,000
Total Current Liabilities $1,825,007,000
Long-Term Debt $395,677,000
Total Assets $4,936,049,000
Intangible Assets $0
Total Liabilities $2,602,550,000
Shares Outstanding (Diluted Average) 411,386,000

Earnings Per Share History

Next Fiscal Year Estimate $2.42
Jan15 $2.21
Jan14 $1.94
Jan13 $1.77
Jan12 $1.43
Jan11 $1.16
Jan10 $0.89
Jan09 $0.58
Jan08 $0.48
Jan07 $0.43
Jan06 $0.34
Jan05 $0.28
Jan04 $0.37
Jan03 $0.31
Jan02 $0.24
Jan01 $0.23
Jan00 $0.21
Jan99 $0.18
Jan98 $0.15
Jan97 $0.10
Jan96 $0.06

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.11
Jan15 $1.87
Jan14 $1.62
Jan13 $1.36
Jan12 $1.07
Jan11 $0.83
Jan10 $0.62
Jan09 $0.47
Jan08 $0.40
Jan07 $0.36
Jan06 $0.32
Jan05 $0.30
Jan04 $0.30
Jan03 $0.25
Jan02 $0.21
Jan01 $0.19
Jan00 $0.16

Recommended Reading:

Other ModernGraham posts about the company

The Best Companies of the Retail Industry – August 2015
5 Undervalued Companies with a Low Beta – July 2015
5 Undervalued Companies with a Low Beta – June 2015
The 12 Best Stocks For Value Investors This Week – 5/30/15
Ross Stores Inc. Quarterly Valuation – May 2015 $ROST

Other ModernGraham posts about related companies

The Best Companies of the Retail Industry – August 2015
Bed Bath & Beyond Inc. Analysis – August 2015 Update $BBBY
Ann Inc. Analysis – Initial Coverage $ANN
Kohl’s Corporation Analysis – August 2015 Update $KSS
Aaron’s Inc. Analysis – Initial Coverage $AAN
Nordstrom Inc. Analysis – July 2015 Update $JWN
Tractor Supply Company Analysis – Initial Coverage $TSCO
Coach Inc. Analysis – July 2015 Update $COH
TJX Companies Analysis – July 2015 Update $TJX
Dollar Tree Inc. Analysis – July 2015 Update $DLTR

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.

Ross Stores Inc. Quarterly Valuation – May 2015 $ROST

220px-Ross_Stores_Inc._(logo)Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Most Undervalued Companies for the Defensive Investor – May 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Ross Stores Inc. (ROST) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Ross Stores, Inc., is an off-price apparel and home fashion chain. The Company operates through its subsidiaries Ross Dress for Less and dd’s DISCOUNTS. The Company offers name brand and designer apparel, accessories, footwear, and home fashions at discounted rates of department and specialty store regular prices. The Company targets customers are primarily from middle income households. The merchant, store, and distribution organizations for Ross Dress and dd’s DISCOUNTS operate as two chains. The Company has one reportable segment. The Company’s operations include only activities related to off-price retailing in stores throughout the United States. dd’s DISCOUNTS store is located in a shopping center in urban and suburban neighborhood and target customers from households with more moderate incomes than Ross customers.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 4/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 4/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – FAIL
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $97.03
MG Value $144.35
MG Opinion Undervalued
Value Based on 3% Growth $54.37
Value Based on 0% Growth $31.87
Market Implied Growth Rate 8.69%
Net Current Asset Value (NCAV) -$0.78
PEmg 25.88
Current Ratio 1.36
PB Ratio 8.81

Balance Sheet – March 2015

Current Assets $2,263,000,000
Current Liabilities $1,659,000,000
Total Debt $398,000,000
Total Assets $4,703,000,000
Intangible Assets $3,000,000
Total Liabilities $2,424,000,000
Outstanding Shares 206,900,000

Earnings Per Share

2015 $4.42
2014 $3.88
2013 $3.53
2012 $2.86
2011 $2.31
2010 $1.77
2009 $1.17
2008 $0.95
2007 $0.85
2006 $0.68
2005 $0.57

Earnings Per Share – ModernGraham

2015 $3.75
2014 $3.23
2013 $2.72
2012 $2.14
2011 $1.66
2010 $1.25

Dividend History

Conclusion:

Ross Stores Inc. is suitable for the Enterprising Investor but not for the Defensive Investor.  The Defensive Investor is concerned by the low current ratio, and the high PEmg and PB ratios, while the Enterprising Investor is only initially concerned by the low current ratio.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research and comparing the company to other opportunities.  From a valuation side of things, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $1.66 in 2011 to $3.75 for 2015.  This level of demonstrated growth outpaces the market’s implied estimate of 8.69% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value well above the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Ross Stores Inc. (ROST)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Ross Stores Inc. Quarterly Valuation – February 2015 $ROST

220px-Ross_Stores_Inc._(logo)Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Most Undervalued Companies for the Defensive Investor – January 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Ross Stores Inc. (ROST) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Ross Stores, Inc. is an off-price apparel and home fashion chain in the United States. The Company operates two brands of off-price retail apparel and home fashion stores: Ross Dress for Less (Ross) and dd’s DISCOUNTS. Ross offers designer apparel, accessories, footwear, and home fashions for the entire family at everyday savings of 20% to 60% off department and specialty store regular prices. Its merchandise offerings also include, but are not limited to, small furniture and furniture accents, educational toys and games, luggage, gourmet food and cookware, watches, and sporting goods. As of February 1, 2014, it operated 130 dd’s DISCOUNTS stores in 10 states that features brand apparel, accessories, footwear, and home fashions for the entire family at everyday savings of 20% to 70% off moderate department and discount store regular prices. At February 1, 2014, it operated a total of 1,276 stores, of which 1,146 were Ross locations in 33 states, the District of Columbia and Guam.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 4/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 4/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – FAIL
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $95.34
MG Value $142.68
MG Opinion Undervalued
Value Based on 3% Growth $53.74
Value Based on 0% Growth $31.50
Market Implied Growth Rate 8.61%
Net Current Asset Value (NCAV) -$0.87
PEmg 25.73
Current Ratio 1.30
PB Ratio 9.07

Balance Sheet – October 2014

Current Assets $2,302,000,000
Current Liabilities $1,767,000,000
Total Debt $398,000,000
Total Assets $4,669,000,000
Intangible Assets $0
Total Liabilities $2,482,000,000
Outstanding Shares 208,000,000

Earnings Per Share

2015 (estimate) $4.29
2014 $3.88
2013 $3.53
2012 $2.86
2011 $2.31
2010 $1.77
2009 $1.17
2008 $0.95
2007 $0.85
2006 $0.68
2005 $0.57

Earnings Per Share – ModernGraham

2015 (estimate) $3.71
2014 $3.23
2013 $2.72
2012 $2.14
2011 $1.66
2010 $1.25

Dividend History

Conclusion:

Ross Stores Inc. is suitable for the Enterprising Investor but not for the Defensive Investor.  The Defensive Investor is concerned by the low current ratio, along with the high PEmg and PB ratios.  The Enterprising Investor is only initially concerned by the low current ratio.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research and comparing the company to other opportunities.  From a valuation side of things, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $1.66 in 2011 to an estimated $3.71 for 2015.  This level of demonstrated growth is greater than the market’s implied estimate of 8.61% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value above the price.

Be sure to check out previous ModernGraham valuations of Ross Stores Inc. (ROST) for greater perspective!

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Ross Stores Inc. (ROST)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in Ross Stores Inc. (ROST) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Ross Stores Inc. Quarterly Valuation – November 2014 $ROST

220px-Ross_Stores_Inc._(logo)Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Highest Dividend Yields Among Undervalued Companies for the Defensive Investor – October 2014.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Ross Stores Inc. (ROST) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Ross Stores, Inc. is an off-price apparel and home fashion chain in the United States. The Company operates two brands of off-price retail apparel and home fashion stores: Ross Dress for Less (Ross) and dd’s DISCOUNTS. Ross offers designer apparel, accessories, footwear, and home fashions for the entire family at everyday savings of 20% to 60% off department and specialty store regular prices. Its merchandise offerings also include, but are not limited to, small furniture and furniture accents, educational toys and games, luggage, gourmet food and cookware, watches, and sporting goods. As of February 1, 2014, it operated 130 dd’s DISCOUNTS stores in 10 states that features brand apparel, accessories, footwear, and home fashions for the entire family at everyday savings of 20% to 70% off moderate department and discount store regular prices. At February 1, 2014, it operated a total of 1,276 stores, of which 1,146 were Ross locations in 33 states, the District of Columbia and Guam.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 4/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 4/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – FAIL
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $80.72
MG Value $141.53
MG Opinion Undervalued
Value Based on 3% Growth $53.30
Value Based on 0% Growth $31.25
Market Implied Growth Rate 6.73%
Net Current Asset Value (NCAV) $0.02
PEmg 21.96
Current Ratio 1.32
PB Ratio 7.88

Balance Sheet – July 2014

Current Assets $2,024,000,000
Current Liabilities $1,532,000,000
Total Debt $150,000,000
Total Assets $4,168,000,000
Intangible Assets $0
Total Liabilities $2,019,000,000
Outstanding Shares 209,700,000

Earnings Per Share

2015 (estimate) $4.20
2014 $3.88
2013 $3.53
2012 $2.86
2011 $2.31
2010 $1.77
2009 $1.17
2008 $0.95
2007 $0.85
2006 $0.68
2005 $0.57

Earnings Per Share – ModernGraham

2015 (estimate) $3.68
2014 $3.23
2013 $2.72
2012 $2.14
2011 $1.66
2010 $1.25

Dividend History

Conclusion:

Ross Stores Inc. is suitable for the Enterprising Investor but not the Defensive Investor.  The Defensive Investor is concerned by the company’s low current ratio in addition to its high PEmg and PB ratios, while the Enterprising Investor is only concerned with the low current ratio.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company and comparing it to other opportunities.  As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $1.66 in 2011 to an estimated $3.68 for 2015.  This level of demonstrated growth outpaces the market’s implied estimate of 6.73% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value above the price.

Be sure to check out previous ModernGraham valuations of Ross Stores Inc. (ROST) for a better perspective!

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Ross Stores Inc. (ROST)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in Ross Stores Inc. (ROST) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

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