ROST - Ross Stores' Off-Price Buying Strategies Imply A Valuation Of $147-$220

• Headquartered in Dublin, California, Ross Stores runs two brands of off-price retail apparel and a home fashion store.
• Ross is a leader because the management executes off-price buying strategies that enable the company to offer merchandise at strong discounts.
• If the company manages its real estate assets effectively, and labor-saving technologies bring a reduction in the FCF margin, my target price is $220.
• I expect sales growth of 46%-2% and EBITDA margin of 9%-17% from 2022 to 2026. I expect D&A to increase from $351 million in 2020 to $528 million in 2026.
• I expect unlevered free cash flow to grow from $1.49 billion in 2020 to $2.2 billion in 2026. Notice that the company’s FCF/Sales would stand at close to 9.9%.

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