How much a stock's price changes over time is a significant driver for most investors. Not only can price performance impact your portfolio, but it can help you compare investment results across sectors and industries as well.
FOMO, or the fear of missing out, also plays a role in investing, particularly with tech giants and popular consumer-facing stocks.
What if you'd invested in Ross Stores (ROST) ten years ago? It may not have been easy to hold on to ROST for all that time, but if you did, how much would your investment be worth today?
Ross Stores' Business In-Depth
With that in mind, let's take a look at Ross Stores' main business drivers.
Based in Dublin, CA, Ross Stores Inc. operates as an off-price retailer of apparel and home accessories, primarily in the United States. The company operates its stores under the Ross Dress for Less (Ross) and dd’s DISCOUNTS names. The company’s stores are located mostly in community and neighborhood shopping centers in heavily populated urban and suburban areas.
Ross Stores primarily offers in-season, branded, and designer apparel, footwear, accessories and other home-related merchandise for everyone in the family. This format primarily targets middle-income households. Prices offered at Ross are generally 20% to 60% below the regular prices of most department and specialty stores.
dd’s DISCOUNTS features more moderately-priced first-quality, in-season, name brand apparel, accessories, footwear, and home fashions for the entire family. These stores target moderate-income households. The dd’s DISCOUNTS stores offer products at a 20% to 70% lesser price than the moderate department and discount stores.
Ross Stores remains focused with its store expansion initiatives over the years. Further, the company’s efforts to expand base by making efforts to increase penetration in the existing as well as new markets. In this regard, it opened 26 stores across nine different states in February and March.
As of Sep 30, 2022, Ross Stores operated 2,019 outlets, including 1,696 Ross stores across 40 states, the District of Columbia and Guam, and 323 dd’s DISCOUNTS stores in 21 states.
Putting together a successful investment portfolio takes a combination of research, patience, and a little bit of risk. For Ross Stores, if you bought shares a decade ago, you're likely feeling really good about your investment today.
According to our calculations, a $1000 investment made in December 2012 would be worth $4,134.14, or a gain of 313.41%, as of December 2, 2022, and this return excludes dividends but includes price increases.
In comparison, the S&P 500 gained 187.86% and the price of gold went up 1.08% over the same time frame.
Analysts are forecasting more upside for ROST too.
Ross Stores has outpaced the industry in the past three months, courtesy of improved SG&A expense, sequential gains at dd’s DISCOUNTS and favorable traffic trends, which aided third-quarter fiscal 2022 results. The company reported top and bottom line beat in the fiscal third quarter. The decline in incentive costs resulted in lower SG&A expense during the quarter. It has been benefiting from the execution of its store expansion plans over the years. It provided an upbeat view for Q4 and fiscal 2022. However, the company’s fiscal third quarter results were impacted by ongoing financial pressures on dd’s customers and increased markdowns, resulting in year over year decline in sales and earnings. In Q4, it expects the highly promotional holiday season and inflationary costs to put pressure on low-to-moderate income customers.
Over the past four weeks, shares have rallied 27.82%, and there have been 9 higher earnings estimate revisions in the past two months for fiscal 2023 compared to none lower. The consensus estimate has moved up as well.
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