ROST 148.87 (+0.53%)
US7782961038Retail - CyclicalApparel Retail

Last update on 2024-06-05

Ross Stores (ROST) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

Ross Stores (ROST) Piotroski F-Score Analysis for 2023 with a score of 5/9. Comprehensive insights on profitability, liquidity, and operational efficiency.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
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Short Analysis - Piotroski Score: 5

We're running Ross Stores (ROST) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
1
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
0
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
0
Current Ratio is growing?
1
Number of shares not diluted?
1
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
0

Ross Stores (ROST) has a Piotroski F-Score of 5, which indicates a moderate financial health standing. The score is based on an evaluation of profitability, liquidity, and operational efficiency criteria. On the positive side, Ross Stores has strong points, like positive net income and cash flow from operations, a higher operating cash flow compared to net income, a growing current ratio, and a reduction in outstanding shares. However, there are concerns as well; the return on assets, leverage, gross margin, and asset turnover ratios have shown negative trends.

Insights for Value Investors Seeking Stable Income

Given the moderate Piotroski F-Score of 5, Ross Stores (ROST) presents a mixed picture for potential investors. The positive indicators suggest operational resilience and strong cash generation, but the negative trends in key financial metrics raise some caution. If you are an investor considering Ross Stores, it would be prudent to further investigate these concerns and monitor future financial performance. It's worth considering for those with a balanced risk approach, but maybe not ideal for very conservative investors.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Ross Stores (ROST)

Company has a positive net income?

This criterion checks if the net income is positive. A positive net income adds 1 point; if negative, it's 0. It indicates overall profitability.

Historical Net Income of Ross Stores (ROST)

The net income for Ross Stores (ROST) in 2023 is $1,512,041,000, which is positive. Over the past 20 years, ROST has consistently shown positive net income, with figures increasing almost every year except for a notable dip in 2020 due to the COVID-19 pandemic. This trend of steady growth signifies the company's strong operational performance and resilience. Thus, according to the Piotroski analysis, we add 1 point for positive net income.

Company has a positive cash flow?

Positive Cash Flow from Operations indicates that a company generates more cash inflows than outflows from its core business activities, which is a fundamental aspect of ensuring long-term sustainability and growth.

Historical Operating Cash Flow of Ross Stores (ROST)

The Cash Flow from Operations (CFO) for Ross Stores (ROST) in 2023 stands at $1,689,373,000, which is positive. Therefore, according to the Piotroski F-Score criterion, this would add 1 point. Over the past 20 years, Ross Stores has consistently maintained a positive operating cash flow, with notable growth from $332,445,000 in 2003 to the current $1,689,373,000. While the CFO has slightly declined from its 2019 peak of $2,066,677,000, the ability to generate robust cash from operations during various economic cycles speaks volumes about the company's resilient business model.

Return on Assets (ROA) are growing?

Return on Assets (ROA) measures a company's profitability in relation to its total assets. This is significant as it indicates how efficiently a company converts its investment in assets into profit.

Historical change in Return on Assets (ROA) of Ross Stores (ROST)

For Ross Stores (ROST), the ROA in 2023 is 0.1118 compared to 0.1307 in 2022, indicating a decline rather than an increase. Therefore, ROST does not score a point for this Piotroski criterion. This decline is noteworthy, especially considering its performance over the last 20 years, where the average operating cash flow has been on a generally upward trend, peaking in 2020 at 2.54 billion USD. Compared to the industry median ROA, which stood at 0.381 in 2023, ROST's performance is significantly lower. This could point towards inefficiencies in asset utilization or profitability challenges in the retail sector for Ross Stores over the last year.

Operating Cashflow are higher than Netincome?

Operating Cash Flow measures the cash a company generates from its regular business operations, while Net Income is the profit after all expenses have been deducted. Comparing the two helps in assessing the quality of earnings.

Historical accruals of Ross Stores (ROST)

In 2023, Ross Stores (ROST) had an Operating Cash Flow of $1,689,373,000 compared to a Net Income of $1,512,041,000. Given that the Operating Cash Flow is higher, we award 1 point for this criterion. This trend is generally positive because it indicates that the company is generating sufficient cash from its operations to cover its expenses and profit. Historically, Ross Stores has mostly seen increasing Operating Cash Flows, peaking at over $2 billion in 2020, which is a good indicator of operational strength—even though there was a decline in Net Income in 2021 and 2022. The consistent high ratio of Operating Cash Flow to Net Income over the years (with positive accruals reducing over time) further strengthens this point.

Liquidity of Ross Stores (ROST)

Leverage is declining?

Leverage is essential to evaluate as it indicates the extent of a company's debt compared to its equity, impacting financial stability and risk.

Historical leverage of Ross Stores (ROST)

Between 2022 and 2023, the leverage for Ross Stores (ROST) has increased from 0.3659 to 0.3764, indicating a rise in the company's debt levels relative to its equity. Over the past 20 years, leverage was maintained at 0 until it began to climb in 2019 reaching the current levels. This recent increase is a concern as it suggests growing dependence on debt, which may elevate financial risk. Consequently, Ross Stores does not earn a point for this criterion.

Current Ratio is growing?

Current ratio measures a company's ability to cover its short-term obligations with its short-term assets.

Historical Current Ratio of Ross Stores (ROST)

In 2023, Ross Stores (ROST) reported a current ratio of 1.8989, compared to 1.773 in 2022. The rise in the current ratio indicates improved liquidity and the company's enhanced capacity to meet its short-term liabilities in 2023. Mathematically, this growth represents approximately a 7.1% improvement year-over-year. Historically, the current ratio of Ross Stores has shown consistent improvements over the past few years as it was 1.648 in 2017 and gradually rose. Comparing it with the industry median, Ross Stores' current ratio is lower than the average, suggesting it may still have room for liquidity enhancements, specifically because the industry's median current ratio for 2023 is 2.6163. Overall, an increasing current ratio is good, although lagging industry standards.

Number of shares not diluted?

Change in shares outstanding examines whether the company has bought back shares or issued new ones. Less outstanding shares indicate share repurchasing, which may suggest strong financial health and can increase stock value.

Historical outstanding shares of Ross Stores (ROST)

When examining Ross Stores (ROST), we find that outstanding shares have decreased from 351,496,000 in 2022 to 343,452,000 in 2023. This reduction of 8,044,000 shares indicates a clear trend towards share buybacks, suggesting that the company is making efforts to increase shareholder value through reducing the supply of shares. Historical data depict a consistent reduction of outstanding shares over the last 20 years, reinforcing the company's commitment to returning value to shareholders over time. Given this positive trend, Ross Stores earns 1 point in the Piotroski analysis for this criterion.

Operating of Ross Stores (ROST)

Cross Margin is growing?

Piotroski F-Score measures the change in gross margin because it is indicative of a company's ability to manage its cost of goods sold or improve its pricing strategy. An increasing gross margin suggests improved profitability from core operations, which is crucial for long-term sustainability.

Historical gross margin of Ross Stores (ROST)

The Gross Margin for Ross Stores (ROST) decreased from 0.2753 in 2022 to 0.254 in 2023, indicating a decline. Therefore, for this criterion, Ross Stores gets 0 points. This negative trend shows that the company’s ability to manage its cost or pricing strategy has worsened in the past year. Moreover, when compared to an industry median gross margin of 0.381 in 2023, Ross Stores' figure of 0.254 is significantly lower, highlighting that the company is underperforming against industry peers. Historical analysis reveals fluctuating gross margins, but this recent downturn is a concerning deviation.

Asset Turnover Ratio is growing?

Asset turnover measures how efficiently a company uses its assets to generate sales revenue. An increasing ratio often indicates improved efficiency.

Historical asset turnover ratio of Ross Stores (ROST)

The asset turnover for Ross Stores (ROST) decreased from 1.4353 in 2022 to 1.382 in 2023. This decline highlights a reduction in the company's efficiency in utilizing its assets to generate revenue. Over the last 20 years, Ross Stores exhibited a general decline in asset turnover, from a high of 2.8898 in 2003 to its current value. Thus, the score for this criterion would be 0, indicating a negative trend for the year 2023.


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