COSTCO WHOLESALE CORP (COST) Stock Fundamental Analysis
NASDAQ:COST - Nasdaq - US22160K1051 - Common Stock - Currency: USD
COST gets a fundamental rating of 6 out of 10. The analysis compared the fundamentals against 40 industry peers in the Consumer Staples Distribution & Retail industry. COST has outstanding health and profitabily ratings, belonging to the best of the industry. This is a solid base for any company. While showing a medium growth rate, COST is valued expensive at the moment. With these ratings, COST could be worth investigating further for quality investing!.
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.
Each year in the past 5 years COST has been profitable.
COST had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
COST has a better Return On Assets (10.39%) than 95.00% of its industry peers.
Looking at the Return On Equity, with a value of 28.91%, COST belongs to the top of the industry, outperforming 85.00% of the companies in the same industry.
Looking at the Return On Invested Capital, with a value of 19.92%, COST belongs to the top of the industry, outperforming 100.00% of the companies in the same industry.
COST had an Average Return On Invested Capital over the past 3 years of 18.60%. This is significantly above the industry average of 8.23%.
The last Return On Invested Capital (19.92%) for COST is above the 3 year average (18.60%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.39% | ||
| ROE | 28.91% | ||
| ROIC | 19.92% |
ROA(3y)9.59%
ROA(5y)8.89%
ROE(3y)28.2%
ROE(5y)27%
ROIC(3y)18.6%
ROIC(5y)17.81%
1.3 Margins
COST has a better Profit Margin (2.92%) than 80.00% of its industry peers.
In the last couple of years the Profit Margin of COST has grown nicely.
Looking at the Operating Margin, with a value of 3.75%, COST is in the better half of the industry, outperforming 70.00% of the companies in the same industry.
COST's Operating Margin has improved in the last couple of years.
COST has a Gross Margin of 12.78%. This is amonst the worse of the industry: COST underperforms 85.00% of its industry peers.
COST's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 3.75% | ||
| PM (TTM) | 2.92% | ||
| GM | 12.78% |
OM growth 3Y-0.72%
OM growth 5Y3.3%
PM growth 3Y4.25%
PM growth 5Y3.86%
GM growth 3Y-0.71%
GM growth 5Y-0.57%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), COST is creating value.
Compared to 1 year ago, COST has about the same amount of shares outstanding.
Compared to 5 years ago, COST has more shares outstanding
COST has a better debt/assets ratio than last year.
2.2 Solvency
COST has an Altman-Z score of 9.74. This indicates that COST is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of COST (9.74) is better than 97.50% of its industry peers.
COST has a debt to FCF ratio of 0.78. This is a very positive value and a sign of high solvency as it would only need 0.78 years to pay back of all of its debts.
Looking at the Debt to FCF ratio, with a value of 0.78, COST belongs to the top of the industry, outperforming 90.00% of the companies in the same industry.
COST has a Debt/Equity ratio of 0.21. This is a healthy value indicating a solid balance between debt and equity.
Looking at the Debt to Equity ratio, with a value of 0.21, COST is in the better half of the industry, outperforming 67.50% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.21 | ||
| Debt/FCF | 0.78 | ||
| Altman-Z | 9.74 |
ROIC/WACC2.25
WACC8.86%
2.3 Liquidity
A Current Ratio of 1.02 indicates that COST should not have too much problems paying its short term obligations.
Looking at the Current ratio, with a value of 1.02, COST is doing worse than 62.50% of the companies in the same industry.
A Quick Ratio of 0.52 indicates that COST may have some problems paying its short term obligations.
COST has a Quick ratio (0.52) which is comparable to the rest of the industry.
The current and quick ratio evaluation for COST is rather negative, while it does have excellent solvency and profitability. These ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.02 | ||
| Quick Ratio | 0.52 |
3. Growth
3.1 Past
COST shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 9.23%, which is quite good.
COST shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 15.11% yearly.
Looking at the last year, COST shows a small growth in Revenue. The Revenue has grown by 5.94% in the last year.
The Revenue has been growing by 10.75% on average over the past years. This is quite good.
EPS 1Y (TTM)9.23%
EPS 3Y14.32%
EPS 5Y15.11%
EPS Q2Q%13.23%
Revenue 1Y (TTM)5.94%
Revenue growth 3Y9.1%
Revenue growth 5Y10.75%
Sales Q2Q%8.02%
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 9.41% on average per year.
The Revenue is expected to grow by 6.62% on average over the next years.
EPS Next Y11.9%
EPS Next 2Y11.08%
EPS Next 3Y10.72%
EPS Next 5Y9.41%
Revenue Next Year7.68%
Revenue Next 2Y7.56%
Revenue Next 3Y7.37%
Revenue Next 5Y6.62%
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
A Price/Earnings ratio of 55.04 indicates a quite expensive valuation of COST.
Compared to the rest of the industry, the Price/Earnings ratio of COST indicates a slightly more expensive valuation: COST is more expensive than 72.50% of the companies listed in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 27.30, COST is valued quite expensively.
With a Price/Forward Earnings ratio of 47.46, COST can be considered very expensive at the moment.
COST's Price/Forward Earnings ratio is a bit more expensive when compared to the industry. COST is more expensive than 62.50% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 21.76, COST is valued quite expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 55.04 | ||
| Fwd PE | 47.46 |
4.2 Price Multiples
77.50% of the companies in the same industry are cheaper than COST, based on the Enterprise Value to EBITDA ratio.
70.00% of the companies in the same industry are cheaper than COST, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 58.84 | ||
| EV/EBITDA | 33.78 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
COST has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)4.63
PEG (5Y)3.64
EPS Next 2Y11.08%
EPS Next 3Y10.72%
5. Dividend
5.1 Amount
COST has a yearly dividend return of 0.53%, which is pretty low.
Compared to an average industry Dividend Yield of 2.03, 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 2.37.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.53% |
5.2 History
The dividend of COST is nicely growing with an annual growth rate of 53.89%!
COST has paid a dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)53.89%
Div Incr Years0
Div Non Decr Years0
5.3 Sustainability
COST pays out 19.69% of its income as dividend. This is a sustainable payout ratio.
COST's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP19.69%
EPS Next 2Y11.08%
EPS Next 3Y10.72%
970.33
+0.16 (+0.02%)
Chartmill FA Rating
GICS SectorConsumer Staples
GICS IndustryGroupConsumer Staples Distribution & Retail
GICS IndustryConsumer Staples Distribution & Retail
Earnings (Last)
Earnings (Next)
Inst Owners71.81%
Inst Owner Change0.03%
Ins Owners0.09%
Ins Owner Change-0.81%
Market Cap430.52B
Analysts78.14
Price Target1090.62 (12.4%)
Short Float %1.16%
Short Ratio2.47
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.53% |
Yearly Dividend20.41
Dividend Growth(5Y)53.89%
DP19.69%
Div Incr Years0
Div Non Decr Years0
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-2.51%
Min EPS beat(2)-4.04%
Max EPS beat(2)-0.98%
EPS beat(4)2
Avg EPS beat(4)0.45%
Min EPS beat(4)-4.04%
Max EPS beat(4)4.5%
EPS beat(8)5
Avg EPS beat(8)1.26%
EPS beat(12)6
Avg EPS beat(12)-0.44%
EPS beat(16)10
Avg EPS beat(16)1.2%
Revenue beat(2)0
Avg Revenue beat(2)-1.49%
Min Revenue beat(2)-1.94%
Max Revenue beat(2)-1.05%
Revenue beat(4)0
Avg Revenue beat(4)-1.86%
Min Revenue beat(4)-2.61%
Max Revenue beat(4)-1.05%
Revenue beat(8)0
Avg Revenue beat(8)-1.78%
Revenue beat(12)0
Avg Revenue beat(12)-2.05%
Revenue beat(16)1
Avg Revenue beat(16)-1.63%
PT rev (1m)-0.84%
PT rev (3m)-0.77%
EPS NQ rev (1m)0.04%
EPS NQ rev (3m)-0.64%
EPS NY rev (1m)0.43%
EPS NY rev (3m)0.02%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.67%
Revenue NY rev (1m)-0.05%
Revenue NY rev (3m)0.18%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 55.04 | ||
| Fwd PE | 47.46 | ||
| P/S | 1.6 | ||
| P/FCF | 58.84 | ||
| P/OCF | 34.65 | ||
| P/B | 15.87 | ||
| P/tB | 15.87 | ||
| EV/EBITDA | 33.78 |
EPS(TTM)17.63
EY1.82%
EPS(NY)20.45
Fwd EY2.11%
FCF(TTM)16.49
FCFY1.7%
OCF(TTM)28.01
OCFY2.89%
SpS605.79
BVpS61.14
TBVpS61.14
PEG (NY)4.63
PEG (5Y)3.64
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.39% | ||
| ROE | 28.91% | ||
| ROCE | 26.6% | ||
| ROIC | 19.92% | ||
| ROICexc | 32.76% | ||
| ROICexgc | 32.76% | ||
| OM | 3.75% | ||
| PM (TTM) | 2.92% | ||
| GM | 12.78% | ||
| FCFM | 2.72% |
ROA(3y)9.59%
ROA(5y)8.89%
ROE(3y)28.2%
ROE(5y)27%
ROIC(3y)18.6%
ROIC(5y)17.81%
ROICexc(3y)29.37%
ROICexc(5y)29.08%
ROICexgc(3y)30.8%
ROICexgc(5y)30.84%
ROCE(3y)24.84%
ROCE(5y)23.78%
ROICexcg growth 3Y-2.2%
ROICexcg growth 5Y2.32%
ROICexc growth 3Y-1.15%
ROICexc growth 5Y1.43%
OM growth 3Y-0.72%
OM growth 5Y3.3%
PM growth 3Y4.25%
PM growth 5Y3.86%
GM growth 3Y-0.71%
GM growth 5Y-0.57%
F-Score7
Asset Turnover3.56
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.21 | ||
| Debt/FCF | 0.78 | ||
| Debt/EBITDA | 0.46 | ||
| Cap/Depr | 216.67% | ||
| Cap/Sales | 1.9% | ||
| Interest Coverage | 84.03 | ||
| Cash Conversion | 99.87% | ||
| Profit Quality | 93.29% | ||
| Current Ratio | 1.02 | ||
| Quick Ratio | 0.52 | ||
| Altman-Z | 9.74 |
F-Score7
WACC8.86%
ROIC/WACC2.25
Cap/Depr(3y)207.83%
Cap/Depr(5y)199.15%
Cap/Sales(3y)1.78%
Cap/Sales(5y)1.77%
Profit Quality(3y)85.7%
Profit Quality(5y)103.11%
High Growth Momentum
Growth
EPS 1Y (TTM)9.23%
EPS 3Y14.32%
EPS 5Y15.11%
EPS Q2Q%13.23%
EPS Next Y11.9%
EPS Next 2Y11.08%
EPS Next 3Y10.72%
EPS Next 5Y9.41%
Revenue 1Y (TTM)5.94%
Revenue growth 3Y9.1%
Revenue growth 5Y10.75%
Sales Q2Q%8.02%
Revenue Next Year7.68%
Revenue Next 2Y7.56%
Revenue Next 3Y7.37%
Revenue Next 5Y6.62%
EBIT growth 1Y11.75%
EBIT growth 3Y8.31%
EBIT growth 5Y14.41%
EBIT Next Year39.54%
EBIT Next 3Y19.39%
EBIT Next 5Y14.7%
FCF growth 1Y25.66%
FCF growth 3Y7.27%
FCF growth 5Y14.57%
OCF growth 1Y26.17%
OCF growth 3Y8.17%
OCF growth 5Y12.27%