Alphabet Inc. (GOOGL) vs Ross Stores, Inc. (ROST): Which Is the Better Buy in 2026?
As of 2026-06-19, GOOGL is overvalued at $368, with a DCF intrinsic value of $94 and a margin of safety of -290%. ROST is overvalued at $233, with an intrinsic value of $164 and a margin of safety of -42%. Of the two, ROST has the wider margin of safety.
Rewards
- ★Alphabet Inc. has maintained ROIC above 15% for 4 consecutive years, indicating a durable competitive advantage.
- ★Gross margin of 60.4% indicates strong pricing power — typical of businesses with significant intellectual property or brand strength.
- ★Alphabet Inc. scores 89/100 on the Economic Moat Score (Wide Moat), with roic consistency as the strongest competitive dimension.
- ★Ross Stores, Inc. has maintained ROIC above 15% for 4 consecutive years, indicating a durable competitive advantage.
- ★Ross Stores, Inc. scores 94/100 on the Economic Moat Score (Wide Moat), with revenue predictability as the strongest competitive dimension.
- ★Free cash flow has grown at a 28.7% CAGR over the past 4 years, demonstrating strong earnings power growth.
Risks
- ⚠FCF yield of 1.6% is below 3%, meaning the market is pricing in substantial future growth to justify the current price.
- ⚠FCF yield of 2.7% is below 3%, meaning the market is pricing in substantial future growth to justify the current price.
- ⚠PEG ratio of 2.77 indicates the stock is expensive relative to its expected growth — the market may be pricing in more growth than analysts project.
- ⚠5 insider sales totaling $9.3M with no purchases in the past 3 months — insiders are reducing their exposure.
Key Valuation Metrics
Learn more →Historical Fundamentals
Learn more →Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
Price ÷ Earnings Per Share — how many years of current earnings you're paying for at today's price. Lower P/E may indicate undervaluation. The dashed forward point is the forward P/E — today's price ÷ analyst consensus EPS.
$1 Retained Earnings Test
Learn more →> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
Buffett's "$1 Test": For every $1 of earnings retained, has management created at least $1 of market value?
> $1 created per $1 retained = Value Creator · < $1 created = Value Destroyer
Discounted Cash Flow (DCF) Analysis
Learn more →Reverse DCF — Market-Implied Growth
Learn more →What growth rate is the market pricing in at $368?
Market pricing in significantly higher growth than history — aggressive.
What growth rate is the market pricing in at $233?
The market implies +15.3% Owner Earnings growth, above historical trends.
Standard FCF implies a demanding +16.0%, reflecting heavy growth investment.
Economic Moat Score
Learn more →Wide moat driven primarily by roic consistency. Reinvestment Efficiency is the area most vulnerable to competitive pressure.
Wide moat with strength across all dimensions. Revenue Predictability is the standout factor.
Forensic Accounting
Learn more →M-Score Trend
M-Score Trend
Beneish's 8-variable model estimates the probability of earnings manipulation. An M-Score above -1.78 signals elevated risk — companies in this range have historically been 3-5× more likely to be manipulating earnings. Scores between -2.22 and -1.78 fall in a grey zone warranting further investigation.
Ownership Breakdown
Learn more →High insider ownership aligns management incentives with shareholders. Institutional concentration can indicate smart-money conviction but also crowding risk.
Insider Buying Activity
Learn more →Open market purchases · includes direct & indirect ownership · excludes option exercises.
Insider Selling Activity
Learn more →Direct ownership only · excludes indirect, option exercises, planned (10b5-1) sales & derivatives.
🎭 Mr. Market's Mood
Learn more →"Market is pricing this stock without strong emotion in either direction"
"Market is optimistic — be cautious and ensure you have a margin of safety"
Composite sentiment score based on market signals. Inspired by Buffett’s "Mr. Market" allegory — fear = potential opportunity, greed = potential risk. Must be used alongside fundamental analysis, not in isolation.
⚖️ Buffett Signal
Learn more →The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
The Buffett Signal cross-references market sentiment with DCF valuation. Configure the DCF Analysis above to generate a signal.
Frequently Asked Questions: GOOGL vs ROST
Is Alphabet Inc. or Ross Stores, Inc. more undervalued in 2026?▼
Based on our discounted cash flow model, ROST trades at a -42.2% margin of safety (intrinsic value $164 vs. price $233), compared to GOOGL's -289.6% margin of safety (intrinsic $94 vs. $368).
Which stock has a wider economic moat, Alphabet Inc. or Ross Stores, Inc.?▼
ROST scores 94/100 (Wide moat), while GOOGL scores 89/100 (Wide moat). The moat score measures competitive advantage durability across ROIC consistency, margin stability, revenue predictability, and reinvestment efficiency.
Is Alphabet Inc. in financial distress?▼
GOOGL's Altman Z-Score of 2.4 places it in the Grey zone, signaling elevated bankruptcy risk. ROST scores 7.5 (Safe zone). The Altman Z-Score is a five-factor model that predicts insolvency within two years; scores below 1.81 indicate significant distress.
Which company has better free cash flow, Alphabet Inc. or Ross Stores, Inc.?▼
Ross Stores, Inc. (ROST) generates a 2.7% free cash flow yield, compared to Alphabet Inc.'s 1.6%. A higher FCF yield means the business converts more of its market value into cash that can be returned to shareholders or reinvested.
Which stock has higher return on invested capital, Alphabet Inc. or Ross Stores, Inc.?▼
ROST earns 22.8% ROIC versus GOOGL's 21.0%. A higher ROIC means the company generates more profit per dollar of capital employed, a hallmark of durable competitive advantage in Buffett-style analysis.
Which dividend is safer, Alphabet Inc.'s or Ross Stores, Inc.'s?▼
ROST's dividend earns a safety score of 94/100 (Very Safe), compared to GOOGL's 88/100 (Very Safe). ROST has raised its dividend for 3 consecutive years.