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 gets an excellent profitability rating and is at the same time showing great financial health properties. COST is valied quite expensively at the moment, while it does show a decent growth rate. This makes COST very considerable for quality investing!
1. Profitability
1.1 Basic Checks
COST had positive earnings in the past year.
In the past year COST had a positive cash flow from operations.
COST had positive earnings in each of the past 5 years.
COST had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
COST's Return On Assets of 10.41% is amongst the best of the industry. COST outperforms 95.00% of its industry peers.
With an excellent Return On Equity value of 29.80%, COST belongs to the best of the industry, outperforming 90.00% of the companies in the same industry.
With an excellent Return On Invested Capital value of 20.16%, COST belongs to the best 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 8.16%.
The 3 year average ROIC (18.60%) for COST is below the current ROIC(20.16%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.41% | ||
| ROE | 29.8% | ||
| ROIC | 20.16% |
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's Profit Margin of 2.89% is amongst the best of the industry. COST outperforms 87.50% of its industry peers.
COST's Profit Margin has improved in the last couple of years.
COST's Operating Margin of 3.69% is fine compared to the rest of the industry. COST outperforms 70.00% of its industry peers.
COST's Operating Margin has improved in the last couple of years.
COST has a worse Gross Margin (12.67%) than 87.50% 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 | 3.69% | ||
| PM (TTM) | 2.89% | ||
| GM | 12.67% |
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
The Return on Invested Capital (ROIC) is well above the Cost of Capital (WACC), so 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
Compared to 1 year ago, COST has an improved debt to assets ratio.
2.2 Solvency
COST has an Altman-Z score of 9.98. This indicates that COST is financially healthy and has little risk of bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 9.98, COST belongs to the top of the industry, outperforming 97.50% of the companies in the same industry.
The Debt to FCF ratio of COST is 0.83, which is an excellent value as it means it would take COST, only 0.83 years of fcf income to pay off all of its debts.
With an excellent Debt to FCF ratio value of 0.83, COST belongs to the best of the industry, outperforming 87.50% of the companies in the same industry.
COST has a Debt/Equity ratio of 0.23. This is a healthy value indicating a solid balance between debt and equity.
The Debt to Equity ratio of COST (0.23) is better than 70.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.23 | ||
| Debt/FCF | 0.83 | ||
| Altman-Z | 9.98 |
ROIC/WACC2.28
WACC8.85%
2.3 Liquidity
A Current Ratio of 1.00 indicates that COST may have some problems paying its short term obligations.
The Current ratio of COST (1.00) is worse than 60.00% of its industry peers.
COST has a Quick Ratio of 1.00. This is a bad value and indicates that COST is not financially healthy enough and could expect problems in meeting its short term obligations.
With a Quick ratio value of 0.49, COST is not doing good in the industry: 60.00% of the companies in the same industry are doing better.
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 | ||
| Quick Ratio | 0.49 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 12.03% over the past year.
The Earnings Per Share has been growing by 15.11% on average over the past years. This is quite good.
Looking at the last year, COST shows a small growth in Revenue. The Revenue has grown by 6.13% 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)12.03%
EPS 3Y14.32%
EPS 5Y15.11%
EPS Q2Q%2.55%
Revenue 1Y (TTM)6.13%
Revenue growth 3Y9.1%
Revenue growth 5Y10.75%
Sales Q2Q%9.04%
3.2 Future
COST is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 10.68% yearly.
Based on estimates for the next years, COST will show a small growth in Revenue. The Revenue will grow by 6.74% on average per year.
EPS Next Y11.87%
EPS Next 2Y11.01%
EPS Next 3Y10.97%
EPS Next 5Y10.68%
Revenue Next Year7.53%
Revenue Next 2Y7.29%
Revenue Next 3Y6.91%
Revenue Next 5Y6.74%
3.3 Evolution
Although the future EPS growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 58.06, COST can be considered very expensive at the moment.
Compared to the rest of the industry, the Price/Earnings ratio of COST indicates a slightly more expensive valuation: COST is more expensive than 70.00% of the companies listed in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 28.29, COST is valued quite expensively.
The Price/Forward Earnings ratio is 48.71, which means the current valuation is very expensive for COST.
60.00% of the companies in the same industry are cheaper than COST, based on the Price/Forward Earnings ratio.
The average S&P500 Price/Forward Earnings ratio is at 21.08. COST is valued rather expensively when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 58.06 | ||
| Fwd PE | 48.71 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, COST is valued a bit more expensive than the industry average as 70.00% of the companies are valued more cheaply.
Based on the Price/Free Cash Flow ratio, COST is valued a bit more expensive than the industry average as 60.00% of the companies are valued more cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 63.72 | ||
| EV/EBITDA | 35.87 |
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.
The excellent profitability rating of COST may justify a higher PE ratio.
PEG (NY)4.89
PEG (5Y)3.84
EPS Next 2Y11.01%
EPS Next 3Y10.97%
5. Dividend
5.1 Amount
COST has a yearly dividend return of 0.48%, which is pretty low.
Compared to an average industry Dividend Yield of 2.36, COST pays a bit more dividend than its industry peers.
With a Dividend Yield of 0.48, COST pays less dividend than the S&P500 average, which is at 2.57.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.48% |
5.2 History
On average, the dividend of COST grows each year by 53.89%, which is quite nice.
COST has been paying a dividend for at least 10 years, so it has a reliable track record.
The dividend of COST decreased in the last 3 years.
Dividend Growth(5Y)53.89%
Div Incr Years2
Div Non Decr Years2
5.3 Sustainability
20.26% of the earnings are spent on dividend by COST. This is a low number and sustainable payout ratio.
The dividend of COST is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP20.26%
EPS Next 2Y11.01%
EPS Next 3Y10.97%
994.5
+26.75 (+2.76%)
Chartmill FA Rating
GICS SectorConsumer Staples
GICS IndustryGroupConsumer Staples Distribution & Retail
GICS IndustryConsumer Staples Distribution & Retail
Earnings (Last)
Earnings (Next)
Inst Owners71.84%
Inst Owner Change0.02%
Ins Owners0.09%
Ins Owner Change0.45%
Market Cap441.24B
Analysts78.7
Price Target1099.11 (10.52%)
Short Float %1.6%
Short Ratio3.26
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.48% |
Yearly Dividend20.41
Dividend Growth(5Y)53.89%
DP20.26%
Div Incr Years2
Div Non Decr Years2
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)0.23%
Min EPS beat(2)-4.04%
Max EPS beat(2)4.5%
EPS beat(4)3
Avg EPS beat(4)0.72%
Min EPS beat(4)-4.04%
Max EPS beat(4)4.5%
EPS beat(8)5
Avg EPS beat(8)-0.21%
EPS beat(12)7
Avg EPS beat(12)-0.16%
EPS beat(16)11
Avg EPS beat(16)2.22%
Revenue beat(2)0
Avg Revenue beat(2)-1.45%
Min Revenue beat(2)-1.85%
Max Revenue beat(2)-1.05%
Revenue beat(4)0
Avg Revenue beat(4)-1.68%
Min Revenue beat(4)-2.61%
Max Revenue beat(4)-1.05%
Revenue beat(8)0
Avg Revenue beat(8)-1.99%
Revenue beat(12)0
Avg Revenue beat(12)-1.91%
Revenue beat(16)2
Avg Revenue beat(16)-1.41%
PT rev (1m)1.31%
PT rev (3m)3.26%
EPS NQ rev (1m)0.32%
EPS NQ rev (3m)0.52%
EPS NY rev (1m)-0.42%
EPS NY rev (3m)0.32%
Revenue NQ rev (1m)0.18%
Revenue NQ rev (3m)0.48%
Revenue NY rev (1m)0.5%
Revenue NY rev (3m)0.76%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 58.06 | ||
| Fwd PE | 48.71 | ||
| P/S | 1.67 | ||
| P/FCF | 63.72 | ||
| P/OCF | 36.88 | ||
| P/B | 17.25 | ||
| P/tB | 17.25 | ||
| EV/EBITDA | 35.87 |
EPS(TTM)17.13
EY1.72%
EPS(NY)20.42
Fwd EY2.05%
FCF(TTM)15.61
FCFY1.57%
OCF(TTM)26.97
OCFY2.71%
SpS595.22
BVpS57.65
TBVpS57.65
PEG (NY)4.89
PEG (5Y)3.84
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.41% | ||
| ROE | 29.8% | ||
| ROCE | 26.92% | ||
| ROIC | 20.16% | ||
| ROICexc | 31.66% | ||
| ROICexgc | 31.66% | ||
| OM | 3.69% | ||
| PM (TTM) | 2.89% | ||
| GM | 12.67% | ||
| FCFM | 2.62% |
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-Score8
Asset Turnover3.61
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.23 | ||
| Debt/FCF | 0.83 | ||
| Debt/EBITDA | 0.48 | ||
| Cap/Depr | 217.05% | ||
| Cap/Sales | 1.91% | ||
| Interest Coverage | 79.93 | ||
| Cash Conversion | 99.11% | ||
| Profit Quality | 90.87% | ||
| Current Ratio | 1 | ||
| Quick Ratio | 0.49 | ||
| Altman-Z | 9.98 |
F-Score8
WACC8.85%
ROIC/WACC2.28
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)12.03%
EPS 3Y14.32%
EPS 5Y15.11%
EPS Q2Q%2.55%
EPS Next Y11.87%
EPS Next 2Y11.01%
EPS Next 3Y10.97%
EPS Next 5Y10.68%
Revenue 1Y (TTM)6.13%
Revenue growth 3Y9.1%
Revenue growth 5Y10.75%
Sales Q2Q%9.04%
Revenue Next Year7.53%
Revenue Next 2Y7.29%
Revenue Next 3Y6.91%
Revenue Next 5Y6.74%
EBIT growth 1Y14.64%
EBIT growth 3Y8.31%
EBIT growth 5Y14.41%
EBIT Next Year39.65%
EBIT Next 3Y19.84%
EBIT Next 5Y15.88%
FCF growth 1Y26.48%
FCF growth 3Y7.27%
FCF growth 5Y14.57%
OCF growth 1Y25.49%
OCF growth 3Y8.17%
OCF growth 5Y12.27%