Ross Stores Inc

ROST: XNAS (USA)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	$976.00	Cmlh	Tlkfrmqxm

Ross’ Mixed Quarterly Results, Lackluster Guidance Do Not Detract From Our Positive Long-Term View

Zain Akbari

Aug 19, 2022

We plan to reduce our $99 per share valuation of narrow-moat Ross by a low- to mid-single-digit percentage after it reported mixed second-quarter earnings. We believe the challenges the firm faces (unfavorable cost environment, volatile demand dynamics as customers retrench amid inflation) should be confined to the near term, with our long-term targets still assuming mid-single-digit top-line growth rates against low-double-digit operating margins. We suggest prospective investors await a greater margin of safety.

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We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

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