Is Now An Opportune Moment To Examine Ross Stores, Inc. (NASDAQ:ROST)?

Today we're going to take a look at the well-established Ross Stores, Inc. (NASDAQ:ROST). The company's stock received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$122 at one point, and dropping to the lows of US$107. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Ross Stores' current trading price of US$112 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Ross Stores’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Ross Stores

What's The Opportunity In Ross Stores?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 5.5% below my intrinsic value, which means if you buy Ross Stores today, you’d be paying a reasonable price for it. And if you believe the company’s true value is $118.93, then there isn’t much room for the share price grow beyond what it’s currently trading. Is there another opportunity to buy low in the future? Since Ross Stores’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

Can we expect growth from Ross Stores?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Ross Stores' earnings over the next few years are expected to increase by 37%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? ROST’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping tabs on ROST, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing Ross Stores at this point in time. For example, we've discovered 1 warning sign that you should run your eye over to get a better picture of Ross Stores.

If you are no longer interested in Ross Stores, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.