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Today we're going to take a look at the well-established Ross Stores, Inc. (NASDAQ:ROST). The company's stock saw a double-digit share price rise of over 10% in the past couple of months on the NASDAQGS. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s examine Ross Stores’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
Is Ross Stores Still Cheap?
Great news for investors – Ross Stores is still trading at a fairly cheap price. According to our valuation, the intrinsic value for the stock is $219.57, but it is currently trading at US$140 on the share market, meaning that there is still an opportunity to buy now. What’s more interesting is that, Ross Stores’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. 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.
Check out our latest analysis for Ross Stores
Can we expect growth from Ross Stores?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Ross Stores' earnings growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. This should lead to robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? Since ROST is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.
Are you a potential investor? If you’ve been keeping an eye on ROST for a while, now might be the time to make a leap. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy ROST. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed buy.