DCF Studio

    ROST · NMS · Consumer Cyclical

    Ross Stores, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 131.31

    Market price

    USD 230.59

    Implied upside

    -43.1%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2026-01-31

    AdjustedCapital expenditure runs at 3.6% of revenue against depreciation of 2.1%. A perpetuity has to be a steady state, so the forecast tapers capex to maintenance at depreciation plus the reinvestment terminal growth requires (g/ROIC of NOPAT), and the terminal year carries on from there. The bridge is shown under Terminal Value.

    Current EV/EBITDA of 23.2x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 131.31-43.1%
    Exit multiple
    USD 203.69-11.7%
    Market price
    USD 230.59

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn2bn3bnFY27FY28FY29FY30FY31FY32FY33FY34FY35FY36
    Nominal FCFFDiscounted to todayUSD
    LineFY27FY28FY29FY30FY31FY32FY33FY34FY35FY36CAGR
    RevenueUSD 25.7bnUSD 27.5bnUSD 29.3bnUSD 31.0bnUSD 32.6bnUSD 34.2bnUSD 35.6bnUSD 36.9bnUSD 38.0bnUSD 38.9bn+4.7%
    EBITUSD 3.0bnUSD 3.2bnUSD 3.4bnUSD 3.6bnUSD 3.8bnUSD 3.9bnUSD 4.1bnUSD 4.2bnUSD 4.4bnUSD 4.5bn+4.7%
    NOPATUSD 2.3bnUSD 2.5bnUSD 2.7bnUSD 2.8bnUSD 3.0bnUSD 3.1bnUSD 3.2bnUSD 3.4bnUSD 3.5bnUSD 3.5bn+4.7%
    Add depreciation & amortisationUSD 547.9mUSD 586.0mUSD 623.6mUSD 660.0mUSD 694.9mUSD 727.8mUSD 758.2mUSD 785.6mUSD 809.6mUSD 829.8m+4.7%
    Less capital expenditureUSD -916.2mUSD -962.0mUSD -1.0bnUSD -1.0bnUSD -1.1bnUSD -1.1bnUSD -1.1bnUSD -1.1bnUSD -1.2bnUSD -1.2bn+2.6%
    Capex, % of revenue3.6%3.5%3.4%3.4%3.3%3.2%3.2%3.1%3.0%3.0%-
    Less increase in working capitalUSD -54.4mUSD -32.9mUSD -32.3mUSD -31.4mUSD -30.1mUSD -28.3mUSD -26.2mUSD -23.6mUSD -20.7mUSD -17.4m-11.9%
    Free cashflow to firmUSD 1.9bnUSD 2.1bnUSD 2.3bnUSD 2.4bnUSD 2.6bnUSD 2.7bnUSD 2.8bnUSD 3.0bnUSD 3.1bnUSD 3.2bn+5.8%
    Discount factor0.96050.88610.81750.75420.69580.64190.59220.54640.50400.4650-
    Present valueUSD 1.8bnUSD 1.9bnUSD 1.8bnUSD 1.8bnUSD 1.8bnUSD 1.7bnUSD 1.7bnUSD 1.6bnUSD 1.6bnUSD 1.5bn-
    Present Value Of The ForecastUSD 17.2bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta0.897Reported 0.847, pulled toward 1.0 (Blume)
    Cost of equity8.69%Risk-free + beta x equity risk premium
    Cost of debt5.29%Risk-free + 40bp, the spread for a AAA rating at 71.4x interest cover. Book interest / average debt was lower, at 0.7%.
    Market capitalisationUSD 74.0bn93.4% of capital
    Total debtUSD 5.2bn6.6% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC8.39%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 131.31

    60% of EV

    Forecast FCFF, final year
    USD 3.2bn
    Capex at depreciation, working capital in reinvestment
    USD 3.6bn
    Less reinvestment at g/ROIC (9.7% of NOPAT)
    USD -347.0m
    Capitalised
    USD 3.2bn
    ROIC (reported)
    25.7%
    Terminal value, undiscounted
    USD 55.9bn
    Terminal value, discounted
    USD 26.0bn
    Enterprise value
    USD 43.2bn
    Less net debt
    USD 617.9m
    Equity value
    USD 42.6bn

    Exit at 20.0x EBITDA

    Value per shareUSD 203.69

    74% of EV

    Terminal value, undiscounted
    USD 106.4bn
    Terminal value, discounted
    USD 49.5bn
    Enterprise value
    USD 66.7bn
    Less net debt
    USD 617.9m
    Equity value
    USD 66.1bn

    Spread between methods: 43%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    6.39%176.49187.29200.99218.88243.13
    7.39%145.22151.43159.00168.42180.38
    8.39%123.09126.84131.32136.70143.29
    9.39%106.62108.96111.70114.94118.80
    10.39%93.9095.3797.0899.08101.42

    Outlined: this model. Green text: above today's price of 230.59. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year6.8%5.5%12.3%
    EBIT margin12.2%11.5%19.8%
    Discount rate-8.4%5.9%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.