Ross Stores, Inc. (ROST) Intrinsic Value & DCF Valuation
Apparel - Retail · NASDAQ
Current Price
$225.53
Intrinsic Value
$232.25
+2.9% margin of safety
What Is Ross Stores, Inc.'s Intrinsic Value?
As of 2026-10-07, the base-case DCF model estimates the intrinsic value of Ross Stores, Inc. (ROST) at $232.25 per share, compared with a market price of $225.53, a margin of safety of +2.9%. The base case assumes 6.6% annual free cash flow growth and a 10.0% discount rate.
Across the sensitivity grid the estimate spans $192.44 to $277.71. Intrinsic value is an estimate built on assumptions, not a fact. A higher discount rate or slower growth pushes the estimate down, while stronger cash flow growth lifts it.
How the DCF works · Recalculate with your own assumptions · What is intrinsic value?
Is Ross Stores, Inc. (ROST) Undervalued?
At $225.53, ROST trades about 2.9% below the base-case intrinsic value estimate. That is a real discount, but it stays short of the 30% margin of safety required before calling a stock undervalued.
COMPETITIVE MOAT
↑Off-Price Retailer Scale Advantage
Ross Stores leverages its massive scale to negotiate favorable terms with vendors. This allows them to offer compelling value to customers, driving traffic and sales volume.
↑Agile Inventory Management
Their ability to quickly acquire and sell diverse merchandise creates a treasure-hunt experience. This dynamic inventory model reduces markdowns and appeals to value-conscious shoppers.
↑Strong Brand Recognition
Ross has cultivated a well-known brand synonymous with value and quality apparel. This recognition attracts a loyal customer base seeking discounted branded goods.
INVESTMENT RISKS
↓Economic Sensitivity
As a discount retailer, Ross's sales are highly sensitive to economic downturns and consumer spending power. Recessions can reduce discretionary spending on apparel.
↓Inventory Obsolescence
The off-price model relies on selling quickly before merchandise becomes dated. Failure to manage inventory effectively can lead to significant markdowns and losses.
↓Intense Retail Competition
The apparel retail sector is highly competitive, with numerous players vying for consumer dollars. New entrants and established competitors pose a constant threat.
Base case
ROST base case valuation
Intrinsic Value
$232.25
Margin of safety
+2.9%
Expected annual return
+0.6%
Base case assumptions: 6.6% annual growth, 10.0% discount rate, 25.93x exit multiple, 5 year projection. Data as of 2026-10-07.
This base case uses default assumptions and is not financial advice. The intrinsic value changes significantly when the growth rate or discount rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the ROST valuation
Adjust the growth rate, discount rate, and exit multiple to see how the intrinsic value and margin of safety for Ross Stores, Inc. respond.
Open DCF Calculator for ROSTCompany Overview
Ross Stores, Inc., through its various subsidiaries, manages a chain of off-price retail establishments focusing on apparel and home goods. These stores operate under two main brand names: Ross Dress for Less and dd's DISCOUNTS. Their product selection primarily includes clothing, accessories, footwear, and household decor. The Ross Dress for Less outlets primarily serve middle-income households, offering merchandise at prices considerably lower than traditional department and specialty stores. Conversely, dd's DISCOUNTS stores cater to moderate-income households, providing products at prices below those typically found in department and discount stores. As of July 5, 2022, the company had approximately 1,950 stores operating across 40 states, the District of Columbia, and Guam. Ross Stores, Inc. was founded in 1957 and is based in Dublin, California.
Financial Metrics — ROST Stock Valuation Data
Revenue/Share (TTM)
$77.00
FCF/Share (TTM)
$8.77
ROIC (TTM)
21.2%
ROE (TTM)
42.3%
P/FCF
25.9x
EV/EBITDA
18.3x
FCF Yield
3.86%
Debt/Equity
0.70x
Based on trailing twelve-month data, ROST shows a free cash flow per share of $8.77 and a ROIC of 21.2%, key inputs for stock valuation using the DCF method. The P/FCF ratio of 25.9x and FCF yield of 3.86% are important context metrics when evaluating ROST's stock valuation relative to peers.
Frequently Asked Questions
What is the intrinsic value of ROST?
Ross Stores, Inc. currently generates $8.77 in free cash flow per share. At the current price of $225.53, a DCF model would discount these cash flows at an appropriate WACC and apply a terminal growth rate to arrive at an intrinsic value. The result depends heavily on your growth and discount rate assumptions — a 1% change in WACC typically shifts the fair value estimate by 10-15%. In MiniValuator the model uses a single discount rate that you can edit directly, 10% by default, rather than a computed WACC.
Is ROST undervalued?
ROST trades at a P/FCF ratio of 25.9x with a free cash flow yield of 3.86%. This P/FCF is in a moderate range. However, whether ROST is truly undervalued requires comparing the DCF intrinsic value to the current market price and evaluating whether the margin of safety is sufficient for your risk tolerance.
How do I value ROST stock using DCF?
To perform a DCF valuation on Ross Stores, Inc.: (1) Start with the trailing free cash flow per share ($8.77) as the base, (2) project future FCF growth over 5-10 years based on Apparel - Retail industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting ROST's risk profile — with a debt-to-equity of 0.70x, capital structure is an important factor, and (4) add a terminal value for cash flows beyond the projection period.
What is DCF valuation and how does it apply to ROST?
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For Ross Stores, Inc., this means projecting how much free cash flow the company will produce over the next 5-10 years, shaped by Apparel - Retail trends, then discounting those amounts to today's dollars. ROST's ROIC of 21.2% reflects how efficiently the company converts invested capital into profit.
How does WACC affect ROST stock valuation?
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For ROST, with a debt-to-equity ratio of 0.70x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 18.3x, the market's implied discount rate can be reverse-engineered for comparison. In MiniValuator you set this discount rate yourself as a single editable number, 10% by default, instead of computing a formal WACC.
Learn More
- See ROST PE Valuation → — Earnings-based stock valuation using PE ratio analysis
- DCF Methodology — Step-by-step guide to discounted cash flow analysis
- PE Methodology — Guide to PE ratio stock valuation
- WACC — Understanding the discount rate used in DCF
- Margin of Safety — How to evaluate downside protection
- Intrinsic Value — How to evaluate stock fair value
- How to Calculate Intrinsic Value — Complete guide for investors
Related Valuations
All Consumer Cyclical valuationsDCF and P/E value ROST with different methods and assumptions, so the two conclusions can differ. Compare the P/E fair value.
Price as of 2026-10-07. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.