ROST – Base Case iCDS 48bps, Negative Case iCDS 54bps, 2027 4.700% Bond YTW of 5.922%, iYTW of 5.199%, A2 Rating from Moody’s, IG4+ (equivalent to Baa1) Rating from Valens, Low Refinancing Need

October 24, 2023

  • Credit markets are slightly overstating ROST’s credit risk with a YTW of 5.922% relative to an Intrinsic YTW of 5.199% and an Intrinsic CDS of 48bps. Meanwhile, Moody’s is overstating the company’s fundamental credit risk, with its investment-grade A2 credit rating two notches higher than Valens’ IG4+ (Baa1) credit rating.
  • Incentives Dictate Behavior™ analysis highlights mostly negative signals for creditors. As a positive, all management members are material owners of ROST equity relative to their annual compensation indicating they may be aligned with shareholders to pursue long-term value creation for the company.
  • Earnings Call Forensics™ analysis of the firm’s Q2 2024 (08/17/2023) highlights that management is confident they are seeing broad-based availability in inventory and that they can carefully manage their inventory to maximize potential for sales and earnings growth.

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