Shop for Profits With This Retailer: Ross Stores, Inc. (ROST)

Indeed, what will a ~2% loss of income for American consumers do to Ross Stores that the volatility of the past several years couldn’t? Given the company’s estimate of $2.761 billion in 4Q revenue and assuming a 9% increase in both 2012 cost of goods sold and SG&A expenses—a percentage that exceeds the 3-year CAGR for each metric—what remains is consistent sales and margin growth at Ross Stores.

2007 2008 2009 2010 2011 2012
Sales 5,975,212 6,486,139 7,184,213 7,866,100 8,608,291 9,722,000
COGS 4,618,220 4,956,526 5,327,278 5,729,735 6,240,760 6,802,428
Gross Margin 22.71% 23.58% 25.85% 27.16% 27.50% 30.03%
SG&A 935,901 1,034,357 1,130,813 1,229,775 1,304,065 1,421,431
Operating Margin 7.05% 7.64% 10.11% 11.53% 12.35% 15.41%

Source: Ross Stores, Inc.
While it’s true Ross Stores won’t offer explosive growth, the company’s consistent operating prowess offers a very compelling story–and consumers have proven that value-based shopping remains compelling. I believe its shares are attractive at current levels much like the discounted clothing and other wares offered at its stores.

The article Shop for Profits With This Retailer originally appeared on Fool.com and is written by Chad Heiges.

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