ROST - Ross Stores: Limited Margin Of Safety At Current Levels

• Ross Stores released its Q3 results last month, reporting 19% revenue growth on a two-year basis, driven by mid-double-digit comp sales growth.
• These were solid results given the impact of the Delta Variant, with a higher average basket making up for reduced traffic.
• However, while sales performance has been solid, the company is seeing margin pressure from increased freight costs, and higher wages.
• With Ross Stores trading at ~21x FY2022 earnings estimates vs. 23 historically, I believe there are much more attractive value propositions elsewhere in the market currently.

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