957.5 USD
-3.28 (-0.34%)
Taking everything into account, COST scores 5 out of 10 in our fundamental rating. COST was compared to 38 industry peers in the Consumer Staples Distribution & Retail industry. COST has an excellent profitability rating, but there are some minor concerns on its financial health. While showing a medium growth rate, COST is valued expensive at the moment.
1. Profitability
1.1 Basic Checks
- In the past year COST was profitable.
- In the past year COST had a positive cash flow from operations.
- In the past 5 years COST has always been profitable.
- COST had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
- COST has a Return On Assets of 10.03%. This is amongst the best in the industry. COST outperforms 84.21% of its industry peers.
- With an excellent Return On Equity value of 27.40%, COST belongs to the best of the industry, outperforming 84.21% of the companies in the same industry.
- Looking at the Return On Invested Capital, with a value of 19.55%, COST belongs to the top of the industry, outperforming 97.37% of the companies in the same industry.
- COST had an Average Return On Invested Capital over the past 3 years of 19.04%. This is significantly below the industry average of 28.30%.
- The last Return On Invested Capital (19.55%) for COST is above the 3 year average (19.04%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.03% | ||
| ROE | 27.4% | ||
| ROIC | 19.55% |
ROA(3y)10.06%
ROA(5y)9.55%
ROE(3y)28.02%
ROE(5y)28.18%
ROIC(3y)19.04%
ROIC(5y)18.81%
1.3 Margins
- COST's Profit Margin of 2.96% is fine compared to the rest of the industry. COST outperforms 73.68% of its industry peers.
- In the last couple of years the Profit Margin of COST has grown nicely.
- With a decent Operating Margin value of 3.80%, COST is doing good in the industry, outperforming 65.79% of the companies in the same industry.
- In the last couple of years the Operating Margin of COST has remained more or less at the same level.
- COST's Gross Margin of 12.88% is on the low side compared to the rest of the industry. COST is outperformed by 81.58% of its industry peers.
- In the last couple of years the Gross Margin of COST has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 3.8% | ||
| PM (TTM) | 2.96% | ||
| GM | 12.88% |
OM growth 3Y2.67%
OM growth 5Y0.6%
PM growth 3Y4.55%
PM growth 5Y4.16%
GM growth 3Y1.87%
GM growth 5Y-0.47%
2. Health
2.1 Basic Checks
- COST has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
- The number of shares outstanding for COST remains at a similar level compared to 1 year ago.
- The number of shares outstanding for COST has been increased compared to 5 years ago.
- COST has a better debt/assets ratio than last year.
2.2 Solvency
- COST has an Altman-Z score of 9.11. This indicates that COST is financially healthy and has little risk of bankruptcy at the moment.
- COST has a better Altman-Z score (9.11) than 94.74% of its industry peers.
- COST has a debt to FCF ratio of 0.64. This is a very positive value and a sign of high solvency as it would only need 0.64 years to pay back of all of its debts.
- COST has a better Debt to FCF ratio (0.64) than 92.11% of its industry peers.
- A Debt/Equity ratio of 0.19 indicates that COST is not too dependend on debt financing.
- Looking at the Debt to Equity ratio, with a value of 0.19, COST is in the better half of the industry, outperforming 71.05% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.19 | ||
| Debt/FCF | 0.64 | ||
| Altman-Z | 9.11 |
ROIC/WACC2.23
WACC8.75%
2.3 Liquidity
- COST has a Current Ratio of 1.04. This is a normal value and indicates that COST is financially healthy and should not expect problems in meeting its short term obligations.
- COST has a Current ratio of 1.04. This is in the lower half of the industry: COST underperforms 63.16% of its industry peers.
- COST has a Quick Ratio of 1.04. This is a bad value and indicates that COST is not financially healthy enough and could expect problems in meeting its short term obligations.
- COST has a Quick ratio (0.53) which is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.04 | ||
| Quick Ratio | 0.53 |
3. Growth
3.1 Past
- The Earnings Per Share has grown by an nice 9.63% over the past year.
- COST shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 15.76% yearly.
- Looking at the last year, COST shows a quite strong growth in Revenue. The Revenue has grown by 8.34% in the last year.
- Measured over the past years, COST shows a quite strong growth in Revenue. The Revenue has been growing by 10.54% on average per year.
EPS 1Y (TTM)9.63%
EPS 3Y11.13%
EPS 5Y15.76%
EPS Q2Q%11.39%
Revenue 1Y (TTM)8.34%
Revenue growth 3Y6.64%
Revenue growth 5Y10.54%
Sales Q2Q%8.3%
3.2 Future
- Based on estimates for the next years, COST will show a quite strong growth in Earnings Per Share. The EPS will grow by 9.37% on average per year.
- Based on estimates for the next years, COST will show a small growth in Revenue. The Revenue will grow by 7.09% on average per year.
EPS Next Y14.08%
EPS Next 2Y11.77%
EPS Next 3Y11.31%
EPS Next 5Y9.37%
Revenue Next Year8.03%
Revenue Next 2Y7.8%
Revenue Next 3Y7.55%
Revenue Next 5Y7.09%
3.3 Evolution
- The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
- When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
- COST is valuated quite expensively with a Price/Earnings ratio of 51.29.
- Based on the Price/Earnings ratio, COST is valued a bit more expensive than the industry average as 71.05% of the companies are valued more cheaply.
- COST is valuated expensively when we compare the Price/Earnings ratio to 28.60, which is the current average of the S&P500 Index.
- Based on the Price/Forward Earnings ratio of 42.09, the valuation of COST can be described as expensive.
- Compared to the rest of the industry, the Price/Forward Earnings ratio of COST indicates a slightly more expensive valuation: COST is more expensive than 60.53% of the companies listed in the same industry.
- The average S&P500 Price/Forward Earnings ratio is at 25.83. COST is valued rather expensively when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 51.29 | ||
| Fwd PE | 42.09 |
4.2 Price Multiples
- Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of COST indicates a slightly more expensive valuation: COST is more expensive than 73.68% of the companies listed in the same industry.
- Compared to the rest of the industry, the Price/Free Cash Flow ratio of COST indicates a slightly more expensive valuation: COST is more expensive than 63.16% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 47.13 | ||
| EV/EBITDA | 31.5 |
4.3 Compensation for Growth
- The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates COST does not grow enough to justify the current Price/Earnings ratio.
- COST has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)3.64
PEG (5Y)3.25
EPS Next 2Y11.77%
EPS Next 3Y11.31%
5. Dividend
5.1 Amount
- With a yearly dividend of 0.53%, COST is not a good candidate for dividend investing.
- Compared to an average industry Dividend Yield of 0.73, COST pays a bit more dividend than its industry peers.
- With a Dividend Yield of 0.53, COST pays less dividend than the S&P500 average, which is at 1.82.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.53% |
5.2 History
- On average, the dividend of COST grows each year by 7.97%, which is quite nice.
- COST has paid a dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)7.97%
Div Incr Years0
Div Non Decr Years0
5.3 Sustainability
- 27.04% of the earnings are spent on dividend by COST. This is a low number and sustainable payout ratio.
- The dividend of COST is growing around the same rate as the earnings are growing. If this keeps up the dividend growth is sustainable.
DP27.04%
EPS Next 2Y11.77%
EPS Next 3Y11.31%
COSTCO WHOLESALE CORP / COST FAQ
What is the fundamental rating for COST stock?
ChartMill assigns a fundamental rating of 5 / 10 to COST.
What is the valuation status of COSTCO WHOLESALE CORP (COST) stock?
ChartMill assigns a valuation rating of 1 / 10 to COSTCO WHOLESALE CORP (COST). This can be considered as Overvalued.
How profitable is COSTCO WHOLESALE CORP (COST) stock?
COSTCO WHOLESALE CORP (COST) has a profitability rating of 7 / 10.
Can you provide the expected EPS growth for COST stock?
The Earnings per Share (EPS) of COSTCO WHOLESALE CORP (COST) is expected to grow by 14.08% in the next year.
Is the dividend of COSTCO WHOLESALE CORP sustainable?
The dividend rating of COSTCO WHOLESALE CORP (COST) is 5 / 10 and the dividend payout ratio is 27.04%.