COSTCO WHOLESALE CORP (COST) Stock Fundamental Analysis
NASDAQ:COST - Nasdaq - US22160K1051 - Common Stock
We assign a fundamental rating of 6 out of 10 to COST. COST was compared to 41 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. These ratings would make COST suitable for quality investing!
1. Profitability
1.1 Basic Checks
COST had positive earnings in the past year.
COST had a positive operating cash flow in the past year.
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 better Return On Assets (10.32%) than 97.50% of its industry peers.
COST has a Return On Equity of 30.98%. This is amongst the best in the industry. COST outperforms 92.50% of its industry peers.
With an excellent Return On Invested Capital value of 20.26%, 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 8.38%.
The 3 year average ROIC (18.60%) for COST is below the current ROIC(20.26%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.32% | ||
| ROE | 30.98% | ||
| ROIC | 20.26% |
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
With an excellent Profit Margin value of 2.93%, COST belongs to the best of the industry, outperforming 85.00% of the companies in the same industry.
COST's Profit Margin has improved in the last couple of years.
With a decent Operating Margin value of 3.67%, COST is doing good in the industry, outperforming 70.00% of the companies in the same industry.
In the last couple of years the Operating Margin of COST has grown nicely.
COST has a Gross Margin of 12.67%. 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 | 3.67% | ||
| PM (TTM) | 2.93% | ||
| 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
COST has a Return on Invested Capital (ROIC), which is well above the Cost of Capital (WACC), which means it is creating value.
Compared to 1 year ago, COST has about the same amount of shares outstanding.
COST has more shares outstanding than it did 5 years ago.
Compared to 1 year ago, COST has an improved debt to assets ratio.
2.2 Solvency
COST has an Altman-Z score of 9.43. This indicates that COST is financially healthy and has little risk of bankruptcy at the moment.
COST's Altman-Z score of 9.43 is amongst the best of the industry. COST outperforms 97.50% of its industry peers.
The Debt to FCF ratio of COST is 1.15, which is an excellent value as it means it would take COST, only 1.15 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 1.15, COST belongs to the top of the industry, outperforming 90.00% of the companies in the same industry.
A Debt/Equity ratio of 0.23 indicates that COST is not too dependend on debt financing.
COST has a better Debt to Equity ratio (0.23) than 70.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.23 | ||
| Debt/FCF | 1.15 | ||
| Altman-Z | 9.43 |
ROIC/WACC2.22
WACC9.11%
2.3 Liquidity
A Current Ratio of 0.98 indicates that COST may have some problems paying its short term obligations.
With a Current ratio value of 0.98, COST is not doing good in the industry: 65.00% of the companies in the same industry are doing better.
COST has a Quick Ratio of 0.98. 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 of 0.43. This is in the lower half of the industry: COST underperforms 62.50% of its industry peers.
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 | 0.98 | ||
| Quick Ratio | 0.43 |
3. Growth
3.1 Past
COST shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 14.59%, 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 5.35% 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)14.59%
EPS 3Y14.32%
EPS 5Y15.11%
EPS Q2Q%6.7%
Revenue 1Y (TTM)5.35%
Revenue growth 3Y9.1%
Revenue growth 5Y10.75%
Sales Q2Q%7.53%
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 12.82% yearly.
COST is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 6.21% yearly.
EPS Next Y11.52%
EPS Next 2Y10.72%
EPS Next 3Y11.05%
EPS Next 5Y12.82%
Revenue Next Year6.72%
Revenue Next 2Y6.84%
Revenue Next 3Y6.56%
Revenue Next 5Y6.21%
3.3 Evolution
The EPS growth rate is stable: in the next years the growth will be about the same 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
Based on the Price/Earnings ratio of 56.38, the valuation of COST can be described as expensive.
Based on the Price/Earnings ratio, COST is valued a bit more expensive than 67.50% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 28.29. COST is valued rather expensively when compared to this.
Based on the Price/Forward Earnings ratio of 46.66, the valuation of COST can be described as expensive.
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 24.44, COST is valued quite expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 56.38 | ||
| Fwd PE | 46.66 |
4.2 Price Multiples
COST's Enterprise Value to EBITDA ratio is a bit more expensive when compared to the industry. COST is more expensive than 70.00% of the companies in the same industry.
The rest of the industry has a similar Price/Free Cash Flow ratio as COST.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 83.9 | ||
| EV/EBITDA | 34.94 |
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)3.73
EPS Next 2Y10.72%
EPS Next 3Y11.05%
5. Dividend
5.1 Amount
COST has a yearly dividend return of 0.50%, which is pretty low.
COST's Dividend Yield is comparable with the industry average which is at 2.47.
Compared to an average S&P500 Dividend Yield of 2.28, COST's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.5% |
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
114.19% of the earnings are spent on dividend by COST. This is not a sustainable payout ratio.
COST's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP114.19%
EPS Next 2Y10.72%
EPS Next 3Y11.05%
COSTCO WHOLESALE CORP
NASDAQ:COST (1/21/2025, 8:00:00 PM)
After market: 946.25 -1.48 (-0.16%)947.73
+4.54 (+0.48%)
Chartmill FA Rating
GICS SectorConsumer Staples
GICS IndustryGroupConsumer Staples Distribution & Retail
GICS IndustryConsumer Staples Distribution & Retail
Earnings (Last)
Earnings (Next)
Inst Owners71.85%
Inst Owner Change-2.3%
Ins Owners0.17%
Ins Owner Change2%
Market Cap420.70B
Analysts78.67
Price Target1064.41 (12.31%)
Short Float %1.48%
Short Ratio3.26
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.5% |
Yearly Dividend20.41
Dividend Growth(5Y)53.89%
DP114.19%
Div Incr Years2
Div Non Decr Years2
Ex-DateN/A
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)0.56%
Min EPS beat(2)-1.18%
Max EPS beat(2)2.31%
EPS beat(4)3
Avg EPS beat(4)1.84%
Min EPS beat(4)-1.18%
Max EPS beat(4)6.12%
EPS beat(8)5
Avg EPS beat(8)-0.31%
EPS beat(12)7
Avg EPS beat(12)0.07%
EPS beat(16)10
Avg EPS beat(16)1.23%
Revenue beat(2)0
Avg Revenue beat(2)-2.43%
Min Revenue beat(2)-2.61%
Max Revenue beat(2)-2.25%
Revenue beat(4)0
Avg Revenue beat(4)-2.3%
Min Revenue beat(4)-3.14%
Max Revenue beat(4)-1.21%
Revenue beat(8)0
Avg Revenue beat(8)-2.22%
Revenue beat(12)0
Avg Revenue beat(12)-1.95%
Revenue beat(16)3
Avg Revenue beat(16)-1.35%
PT rev (1m)10.56%
PT rev (3m)15.7%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-0.35%
EPS NY rev (1m)0%
EPS NY rev (3m)1.89%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-0.37%
Revenue NY rev (1m)-0.05%
Revenue NY rev (3m)-0.47%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 56.38 | ||
| Fwd PE | 46.66 | ||
| P/S | 1.63 | ||
| P/FCF | 83.9 | ||
| P/OCF | 42.29 | ||
| P/B | 17.21 | ||
| P/tB | 17.21 | ||
| EV/EBITDA | 34.94 |
EPS(TTM)16.81
EY1.77%
EPS(NY)20.31
Fwd EY2.14%
FCF(TTM)11.3
FCFY1.19%
OCF(TTM)22.41
OCFY2.36%
SpS583.03
BVpS55.08
TBVpS55.08
PEG (NY)4.89
PEG (5Y)3.73
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.32% | ||
| ROE | 30.98% | ||
| ROCE | 27.06% | ||
| ROIC | 20.26% | ||
| ROICexc | 30.56% | ||
| ROICexgc | 30.56% | ||
| OM | 3.67% | ||
| PM (TTM) | 2.93% | ||
| GM | 12.67% | ||
| FCFM | 1.94% |
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 Turnover3.53
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.23 | ||
| Debt/FCF | 1.15 | ||
| Debt/EBITDA | 0.49 | ||
| Cap/Depr | 216.03% | ||
| Cap/Sales | 1.91% | ||
| Interest Coverage | 78.49 | ||
| Cash Conversion | 84.44% | ||
| Profit Quality | 66.18% | ||
| Current Ratio | 0.98 | ||
| Quick Ratio | 0.43 | ||
| Altman-Z | 9.43 |
F-Score8
WACC9.11%
ROIC/WACC2.22
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)14.59%
EPS 3Y14.32%
EPS 5Y15.11%
EPS Q2Q%6.7%
EPS Next Y11.52%
EPS Next 2Y10.72%
EPS Next 3Y11.05%
EPS Next 5Y12.82%
Revenue 1Y (TTM)5.35%
Revenue growth 3Y9.1%
Revenue growth 5Y10.75%
Sales Q2Q%7.53%
Revenue Next Year6.72%
Revenue Next 2Y6.84%
Revenue Next 3Y6.56%
Revenue Next 5Y6.21%
EBIT growth 1Y13.78%
EBIT growth 3Y8.31%
EBIT growth 5Y14.41%
EBIT Next Year39.64%
EBIT Next 3Y19.62%
EBIT Next 5Y18.95%
FCF growth 1Y75.87%
FCF growth 3Y7.27%
FCF growth 5Y14.57%
OCF growth 1Y47.51%
OCF growth 3Y8.17%
OCF growth 5Y12.27%