ROST
Ross Stores, Inc.
$225.81
Platform & Compounding FCF
50%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 46.9% above fair value
You pay
$225.81
Bear
$125.36
Fair
$153.69
Bull
$179.27
Bear
$125.36
-44.5%
4% stage 1 growth, 11% discount
Fair
$153.69
-31.9%
7% stage 1 growth, 11% discount
Bull
$179.27
-20.6%
9% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (7% base case)
Terminal Value % of EV
36%
Implied Market Multiple
35.2x
Market is pricing in (growth)
16.5%
vs 6.8% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $259.89 from 47 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $153.69 per share.
Warnings
Wall Street's average price target is $259.89 (from 47 analysts). Our estimate is 58% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions