970.28 USD
-7.39 (-0.76%)
967.4 USD
-2.88 (-0.3%)
We assign a fundamental rating of 5 out of 10 to COST. COST was compared to 38 industry peers in the Consumer Staples Distribution & Retail industry. While COST has a great profitability rating, there are some minor concerns on its financial health. COST is quite expensive at the moment. It does show a decent growth rate.
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.
- In the past 5 years COST always reported a positive cash flow from operatings.
1.2 Ratios
- The Return On Assets of COST (10.03%) is better than 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.
- COST has a better Return On Invested Capital (19.55%) than 97.37% of its industry peers.
- The Average Return On Invested Capital over the past 3 years for COST is significantly below the industry average of 28.30%.
- The 3 year average ROIC (19.04%) for COST is below the current ROIC(19.55%), indicating increased profibility in the last year.
| 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
- The Profit Margin of COST (2.96%) is better than 73.68% of its industry peers.
- COST's Profit Margin has improved in the last couple of years.
- COST has a Operating Margin of 3.80%. This is in the better half of the industry: COST outperforms 65.79% of its industry peers.
- COST's Operating Margin has been stable in the last couple of years.
- COST has a worse Gross Margin (12.88%) than 81.58% of its industry peers.
- COST's Gross Margin has been stable in the last couple of years.
| 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.
- Compared to 5 years ago, COST has more shares outstanding
- COST has a better debt/assets ratio than last year.
2.2 Solvency
- An Altman-Z score of 9.15 indicates that COST is not in any danger for bankruptcy at the moment.
- COST's Altman-Z score of 9.15 is amongst the best of the industry. COST outperforms 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's Debt to FCF ratio of 0.64 is amongst the best of the industry. COST outperforms 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 | 9.15 |
ROIC/WACC2.24
WACC8.73%
2.3 Liquidity
- A Current Ratio of 1.04 indicates that COST should not have too much problems paying its short term obligations.
- COST has a worse Current ratio (1.04) than 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 of 0.53. This is comparable to the rest of the industry: COST outperforms 44.74% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.04 | ||
| Quick Ratio | 0.53 |
3. Growth
3.1 Past
- COST shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 9.63%, 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 15.76% 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.
- The Revenue has been growing by 10.54% on average over the past years. This is quite good.
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
- COST is expected to show quite a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 9.37% yearly.
- COST is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 7.09% yearly.
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.
- 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 51.97, COST can be considered very expensive at the moment.
- Based on the Price/Earnings ratio, COST is valued a bit more expensive than 71.05% of the companies in the same industry.
- COST is valuated expensively when we compare the Price/Earnings ratio to 28.82, which is the current average of the S&P500 Index.
- COST is valuated quite expensively with a Price/Forward Earnings ratio of 42.65.
- Based on the Price/Forward Earnings ratio, COST is valued a bit more expensive than the industry average as 60.53% of the companies are valued more cheaply.
- Compared to an average S&P500 Price/Forward Earnings ratio of 25.95, COST is valued quite expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 51.97 | ||
| Fwd PE | 42.65 |
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.
- Based on the Price/Free Cash Flow ratio, COST is valued a bit more expensive than the industry average as 63.16% of the companies are valued more cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 47.76 | ||
| EV/EBITDA | 31.82 |
4.3 Compensation for Growth
- The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
- The decent profitability rating of COST may justify a higher PE ratio.
PEG (NY)3.69
PEG (5Y)3.3
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.
- Compared to an average S&P500 Dividend Yield of 1.82, COST's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.53% |
5.2 History
- The dividend of COST is nicely growing with an annual growth rate of 7.97%!
- COST has been paying a dividend for at least 10 years, so it has 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.
- COST's earnings are growing around the same pace than its dividend. As long as the earnings growth is kept 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%.