ROST – Base Case iCDS 61bps, Negative Case iCDS 69bps, 2030 4.800% Bond YTW of 5.762%, iYTW of 5.192%, A2 Rating from Moody’s, IG4+ (equivalent to Baa1) Rating from Valens, Low Refinancing Need

June 4, 2024

  • Credit markets are slightly overstating ROST’s credit risk with a YTW of 5.762% relative to an Intrinsic YTW of 5.192% and an Intrinsic CDS of 61bps.
  • Incentives Dictate Behavior™ analysis highlights mixed signals for credit holders. As positives, most management members are material owners of ROST equity relative to their annual compensation, indicating they may be well-aligned with shareholders to pursue long-term value creation for the company. Also, most members of management have low change-in-control compensation relative to their average annual compensation, indicating they are not likely incentivized to pursue a takeover or accept a sale of the company, decreasing event risk for creditors.
  • Earnings Call Forensics™ analysis of the firm’s Q1 2025 (5/23/2024) highlights that management is confident focusing on increasing branded inventory, providing good value, and expanding assortment will lead to more market share

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