Introduction<br />Ross Stores, Inc. (NASDAQ: ROST) is a chain of American off-price department stores, operating under the...
Competitors <br />TJX Companies (TJX)<br />Retail Ventures (RVI) <br />Men's Warehouse (MW) <br />Macy's Inc. (M)<br />Koh...
Industry Outlook<br />Despite the positive reaction to retail earnings outlook remain negative on the discount retail indu...
Financial Outlook<br />Earnings<br />For the fourth quarter, the company reported earnings of $1.16 per share, which is in...
Analysts Outlook<br />
Strategic Advantage<br />Ross Stores is trying to obtain a Strategic advantage over its competition by:<br />Maintaining a...
SWOT Matrix<br />             Strengths<br />      Opportunities<br />          Weakness<br />            Threats<br />
Recent News<br />Ross Stores has recently been downgraded by JP Morgan and Barclays Capital from Overweight to Neutral.  <...
DCF Valuation<br /><ul><li>2- stage growth model
Growth rate 3.62% (6 years) followed by terminal growth of 2.8%
Debt Ratio remains constant at industry average
DCF (FCFF) = $7.8 Billion
Large cash position
Add cash and subtract LTD, $8.5 Billion (Enterprise Value)
Shares outstanding (not issued) = 127 Million
Upcoming SlideShare
Loading in...5
×

Corporate Valuation of Ross Stores

2,056

Published on

Corporate Valuation Project for course at WSU

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
2,056
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
15
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Corporate Valuation of Ross Stores

  1. 1. Introduction<br />Ross Stores, Inc. (NASDAQ: ROST) is a chain of American off-price department stores, operating under the name Ross Dress for Less. It is the nation's third largest off-price retailer (behind T.J. Maxx and Marshalls). <br />Ross Stores is in the apparel industry which includes companies whose sales come from discretionary income purchases. <br />
  2. 2. Competitors <br />TJX Companies (TJX)<br />Retail Ventures (RVI) <br />Men's Warehouse (MW) <br />Macy's Inc. (M)<br />Kohl's (KSS)<br />Discount retailers such as Target (TGT) and Wal-Mart (WMT)<br />
  3. 3. Industry Outlook<br />Despite the positive reaction to retail earnings outlook remain negative on the discount retail industry. <br />Negative view of the group is based on the weak economic environment, higher savings rates and de-leveraging in the financial system. These factors all point to continued pressure on consumer spending.<br />
  4. 4. Financial Outlook<br />Earnings<br />For the fourth quarter, the company reported earnings of $1.16 per share, which is in line with the Zacks Consensus Estimate. <br />Quarterly earnings were up 52.6% year-over-year. <br />For fiscal 2009, Ross reported earnings of $3.54 per share, which were up 51.9% from fiscal 2008.<br />
  5. 5. Analysts Outlook<br />
  6. 6. Strategic Advantage<br />Ross Stores is trying to obtain a Strategic advantage over its competition by:<br />Maintaining a recognizable brands, labels, and fashions at strong discounts throughout the store<br />Meeting customer needs on a local and consistent basis<br />Delivering a shopping experience reflective of the expectations of an off-price customer <br />Managing real estate growth to compete effectively across all our markets<br />
  7. 7. SWOT Matrix<br /> Strengths<br /> Opportunities<br /> Weakness<br /> Threats<br />
  8. 8. Recent News<br />Ross Stores has recently been downgraded by JP Morgan and Barclays Capital from Overweight to Neutral. <br />Moving ahead the outlook according to analyst look bleak on the discount retail shop which may see increase in market share but decrease in profit margin. <br />The market leader and biggest competitors in discount stores market is TJX Companies (TJX) with $19 billion in revenue compared to $6.5 billion for Ross Stores. Other competitors in the industry have significantly weaker profit margins.<br />Ross Stores March 2010 same-store sales up by 14%.<br />
  9. 9. DCF Valuation<br /><ul><li>2- stage growth model
  10. 10. Growth rate 3.62% (6 years) followed by terminal growth of 2.8%
  11. 11. Debt Ratio remains constant at industry average
  12. 12. DCF (FCFF) = $7.8 Billion
  13. 13. Large cash position
  14. 14. Add cash and subtract LTD, $8.5 Billion (Enterprise Value)
  15. 15. Shares outstanding (not issued) = 127 Million
  16. 16. Fair Value= $66.70 /share</li></li></ul><li>DCF- Model<br />
  17. 17. Relative Valuation<br />
  18. 18. Relative Valuation Cont.<br />
  19. 19. Option Valuation<br />
  20. 20. Option Valuation Cont.<br /> Option Valuation is not Applicable in the Corporate Valuation of Ross Stores<br />
  21. 21. Final Analysis<br /><ul><li>Undervalued based on DCF and P.E. Regression model
  22. 22. Projected appreciation 7-16%
  23. 23. Matches analysts’ estimates (Hold/Neutral); Could because of possible acquisition
  24. 24. May grow because of recession</li>
  1. A particular slide catching your eye?

    Clipping is a handy way to collect important slides you want to go back to later.

×