Strong Third Quarter at Ross Shows Its Value Proposition Is Compelling; Shares Trade Fairly

Our $97 per share valuation of narrow-moat Ross should rise by a high-single-digit percentage, not far from the trading price’s reaction after the firm reported third-quarter earnings. The period was strong (with comparable sales down 3%, much better than our 8% estimated decline) and our near-term forecasts should rise, but our 10-year average targets still assume mid-single-digit top-line growth rates against low-double-digit operating margins, as we already had a favorable view of the chain’s long-term prospects. We suggest investors await a more attractive entry point.