Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Ross Stores, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from -0.9% to 1.0% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 3, DPO 54, DIO 57). At a 8.2% WACC with mid-year discounting, the terminal value (84% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 16.1x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $167.90 per share, suggesting ROST is overvalued by 22.2% at the current price of $215.81.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 2,561 | 2,773 | 2,946 | 3,137 | 3,170 | 3,249 |
| (−) Net Interest | 74 | 80 | 85 | 90 | 91 | 94 |
| (+) D&A | 703 | 746 | 783 | 809 | 855 | 877 |
| EBITDA | 3,337 | 3,599 | 3,814 | 4,037 | 4,117 | 4,220 |
| (−) Tax | 617 | 668 | 710 | 756 | 764 | — |
| (−) CapEx | 775 | 840 | 892 | 950 | 960 | — |
| (−) ΔWC | -106 | 27 | 22 | 24 | 4 | — |
| Free Cash Flow (FCF) | 2,050 | 2,065 | 2,191 | 2,307 | 2,389 | — |
| Peers' EBITDA Multiple | 16.1x | |||||
| Terminal Value | 67,894 | |||||
| WACC / Discount Rate | 8.19% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 1,971 | 1,835 | 1,799 | 1,752 | 1,676 | 45,813 |
| Enterprise Value | 54,847 | |||||
| Projection Period | 9,034 | 16.5% | ||||
| Terminal Value | 45,813 | 83.5% | ||||
| (−) Current Net Debt | 618 | |||||
| Equity Value | 54,229 | |||||
| (÷) Outstanding Shares | 323M | |||||
| Fair Price | $168 | -22.2% | ||||
| WACC \ EV/EBITDA Exit Multiple | 12.1x | 14.1x | 16.1x | 18.1x | 20.1x |
|---|---|---|---|---|---|
| 6.2% | $144 | $164 | $183 | $202 | $222 |
| 7.2% | $138 | $157 | $175 | $194 | $212 |
| 8.2% | $133 | $150 | $168 | $186 | $203 |
| 9.2% | $127 | $144 | $161 | $178 | $195 |
| 10.2% | $122 | $138 | $154 | $170 | $186 |
Current price: $215.81. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.