This firm has a beta of 0.701. Let's try to break down what Ross Stores's beta means in this case. As returns on the market increase, Ross Stores returns are expected to increase less than the market. However, during the bear market, the loss on holding Ross Stores will be expected to be smaller as well. The beta indicator helps investors understand whether Ross Stores moves in the same direction as the rest of the market, and how volatile (i.e., risky) it is compared to the market (i.e., selected benchmark). In other words, if Ross Stores deviates very little from the market, it does not add much risk to the portfolio, but it also doesn't increase the expected returns.
There are currently many different techniques concerning forecasting the market as a whole as well as
predicting future values of individual securities such as Ross Stores. Regardless of method or technology, to accurately forecast the stock market is more a matter of luck rather than a particular technique. Nevertheless, trying to predict the stock market accurately is still an essential part of the overall investment decision process. Using different forecasting techniques and comparing the results might improve your chances of accuracy even though unexpected events may often change the
market sentiment and impact your forecasting results.
Predictive Modules for Ross Stores
Sophisticated investors, who have witnessed
many market ups and downs, anticipate that the market will even out over time. This tendency of Ross Stores' price to converge to an average value over time is called mean reversion. However, historically, high market prices usually discourage investors that believe in mean reversion to invest, while low prices are viewed as an opportunity to buy.
Please note, it is not enough to conduct a financial or market analysis of a single entity such as Ross Stores. Your research has to be compared to or analyzed against Ross Stores' peers to derive any actionable benefits. When done correctly, Ross Stores' competitive analysis will give you plenty of quantitative and qualitative data to validate your investment decisions or develop an entirely new strategy toward taking a position in Ross Stores.
How important is Ross Stores's Liquidity
Ross Stores
financial leverage refers to using borrowed capital as a funding source to finance Ross Stores ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Ross Stores financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Ross Stores' owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Ross Stores' financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the
breakdown between Ross Stores's total debt and its cash.
Another Deeper Perspective
The small drop in market price for the last few months created some momentum for private investors as it was traded today as low as
88.57 and as high as
91.2 per share. The company directors and management did not add much value to Ross Stores investors in
July. However, diversifying your holdings with Ross Stores or similar stocks can still protect your portfolio during high-volatility market scenarios. The stock standard deviation of daily returns for 30 days investing horizon is currently 2.5. The current volatility is consistent with the ongoing market swings in
July 2020 as well as with Ross Stores unsystematic, company-specific events.
Returns Breakdown
| Return on Investment | 63.39 |
| Return on Assets | 22.66 |
| Return on Equity | 48.94 |
| Return Capital | 0.52 |
| Return on Sales | 0.11 |
Are you still undecided about Ross Stores?
Value At Risk just dropped to -4.45, may call for upcoming price decrease. Ross Stores currently demonstrates below-verage downside deviation. It has Information Ratio of -0.01 and Jensen Alpha of 0.04. However, we do advice investors to further question Ross Stores expected returns to ensure all indicators are consistent with the current outlook about its relatively low value at risk.
The Bottom Line
Whereas some companies in the apparel retail industry are either recovering or due for a correction, Ross Stores may not be as strong as the others in terms of longer-term growth potentials. With an impartial outlook on the current market volatility, it may be better to hold off any inventment activity and neither buy nor quit any shares of Ross Stores at this time. The Ross Stores risk-reward trade off is not appealing enough to do any trading. Please use our equity advice module to run different scenarios to ensure your current risk level and investment horizon are fully reflective of your current investing preferences in regards to Ross Stores.
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Raphi Shpitalnik is a Junior Member of Macroaxis Editorial Board. Raphael is a young entrepreneur who joined Macroaxis on a part-time basis at the beginning of the pandemic and eventually acquired a real taste for investing and fintech. He likes to analyze different equity instruments across a wide range of industries, focusing primarily on consumer products, sports, fintech, cannabis, and AI.
View Profile This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Raphi Shpitalnik do not own shares of Ross Stores. Please refer to our
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