Ross Stores Inc. (NASDAQ:ROST)

Return on Assets (ROA)

The ROA demonstrates a strong performance trend from the beginning of the data period, starting around 21%, and gradually increasing to a peak near 26% by early 2019. Subsequently, a noticeable decline occurs, with ROA falling sharply to below 9% by early 2021, reaching a low point of approximately 0.67%. After this trough, there is a recovery trend, with ROA improving to around 12% by late 2022. The overall pattern indicates a period of robust asset profitability initially, followed by a substantial drop possibly linked to external factors, and a partial recovery towards the end of the timeframe.

Financial Leverage

Financial leverage remains relatively stable in the initial periods, hovering around 2.0 ratios through mid-2019. From that point forward, a marked increase is observed, rising steadily and peaking near 4.16 in late 2020. Following this peak, leverage declines gradually to levels slightly above 3.1 by late 2022. This suggests an initial conservative capital structure, increased reliance on debt or liabilities in the middle period, and a moderate reduction of financial risk entering the latest periods.

Return on Equity (ROE)

The ROE closely mirrors the trends observed in ROA but amplified, indicating the impact of leverage on shareholder returns. ROE starts around 41% in early periods, climbing consistently to reach a peak exceeding 50% in early 2020. A sharp decline follows, dropping to as low as 2.6% by early 2021. From that point, ROE exhibits a substantial rebound, rising again to over 40% by late 2021, before experiencing a moderate decline towards 34.5% in late 2022. This pattern reflects a volatile period for shareholder returns, influenced by fluctuations in both operational efficiency and capital structure.

Summary of Trends

The data reveals a phase of strong operational performance until early 2019, supported by stable leverage. Post-2019, leverage increases significantly, coinciding with a sharp downturn in profitability metrics, especially during 2020, a period likely impacted by external economic disruptions. Both ROA and ROE plummet to their lowest points in early 2021, followed by a recovery phase marked by decreasing leverage and rebounding returns. Despite the recovery, both returns on assets and equity in late 2022 remain below their pre-downturn peaks, indicating ongoing challenges or a normalization of performance post-recovery.

Net Profit Margin

The net profit margin showed a general upward trend from 8.69% in April 2016 to a peak of approximately 10.68% in February 2019, indicating improving profitability during this period. After this peak, the margin remained relatively stable around 10.4% until early 2020. Subsequently, a significant decline occurred, reaching a low of 0.68% by January 2021, reflecting deteriorated profitability, likely due to adverse external factors. From early 2021 onwards, the margin rebounded steadily to around 7.74% by October 2022, suggesting a recovery phase.

Asset Turnover

Asset turnover was relatively stable between April 2016 and February 2019, fluctuating around 2.4, which indicates consistent efficiency in asset utilization during this time. However, beginning in early 2019, there was a marked decline, with the ratio dropping to below 1.0 by January 2021, reflecting a reduction in the effectiveness of assets to generate revenue. A recovery trend emerged thereafter, with the ratio improving to approximately 1.4 by late 2022, though still below the earlier peak levels.

Financial Leverage

Financial leverage ratios ranged from about 1.88 to 2.02 between April 2016 and February 2019, indicating moderate use of debt in the company’s capital structure. Starting mid-2019, leverage increased significantly, peaking at 4.16 in October 2020, which suggests greater reliance on debt financing. Following this peak, a gradual reduction in leverage occurred, down to approximately 3.16 by October 2022, reflecting a partial deleveraging effort while maintaining an elevated leverage level compared to earlier years.

Return on Equity (ROE)

Return on equity followed a strong upward trajectory from approximately 40.67% in April 2016 to a peak of 50.25% in February 2020, reflecting robust profitability and efficient capital use. A sharp decline ensued starting in early 2020, bottoming out at 2.59% by January 2021, indicative of significant operational challenges or market disruptions. Post this low, ROE rebounded steadily, reaching around 34.53% by October 2022. Although the recovery is notable, the level remains below the prior peak, signifying partial restoration of shareholder returns.

The net profit margin demonstrates an overall upward trend from early 2016 through to the beginning of 2020, increasing from approximately 8.69% to a peak near 10.68%. This indicates improving profitability during this period. However, a significant decline is observed starting in early 2020, dropping sharply to a low of 0.68% by the end of 2020. Following this decline, there is a recovery trend through 2021 and 2022, with the net profit margin rising back to around 7.74% by late 2022, though it does not fully return to its previous peak levels.

Asset turnover shows relatively stable performance from 2016 through early 2019, fluctuating around a ratio of 2.3 to 2.5, which suggests consistent efficiency in using assets to generate revenue. A pronounced decrease occurs starting in mid-2019, where asset turnover drops significantly to about 1.3 and continues to decline further, reaching under 1.0 during late 2020. This decline aligns with the period of reduced net profit margin. Starting in late 2020, a moderate recovery in asset turnover appears, climbing gradually to approximately 1.4 by the end of 2022, although it remains substantially lower than pre-2019 levels.

Return on assets (ROA) follows a similar pattern to net profit margin and asset turnover. ROA remains strong and relatively stable between approximately 20% and 26% from 2016 through early 2019. There is a marked downturn beginning in early 2020, with ROA falling steeply to as low as 0.67%, suggesting a significant reduction in the company's efficiency at generating profit from its assets during this time. A recovery trajectory is evident through 2021 and 2022 where ROA improves to nearly 11%, yet the ratio remains below the historical peak levels observed in prior years.

Overall, the data indicates that the company experienced robust profitability and operational efficiency from 2016 until early 2020, followed by a sharp decline likely linked to adverse external factors impacting financial performance. Subsequent quarters demonstrate gradual recovery trends in profitability, asset utilization, and return on assets, though these metrics have not returned to their highest historical levels within the observed period.

Net Profit Margin

Increasing trend through early 2020, sharp decline in 2020, partial recovery by late 2022.

Asset Turnover

Stable and high from 2016 to 2019, significant fall in 2019-2020, gradual recovery afterwards yet below prior peaks.

Return on Assets (ROA)

Strong and consistent up to early 2019, steep drop in 2020, followed by gradual improvement but still below previous highs.