COSTCO WHOLESALE CORP (COST)
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 scores excellent points on both the profitability and health parts. This is a solid base for a good stock. COST is valied quite expensively at the moment, while it does show a decent growth rate. These ratings would make COST suitable for quality investing!
1. Profitability
1.1 Basic Checks
In the past year COST was profitable.
COST had a positive operating cash flow in the past year.
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
The Return On Assets of COST (10.56%) is better than 100.00% of its industry peers.
COST's Return On Equity of 32.95% is amongst the best of the industry. COST outperforms 92.68% of its industry peers.
With an excellent Return On Invested Capital value of 20.73%, COST belongs to the best of the industry, outperforming 97.56% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for COST is significantly above the industry average of 8.25%.
The 3 year average ROIC (17.95%) for COST is below the current ROIC(20.73%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.56% | ||
| ROE | 32.95% | ||
| ROIC | 20.73% |
ROA(3y)8.89%
ROA(5y)8.39%
ROE(3y)27.31%
ROE(5y)25.56%
ROIC(3y)17.95%
ROIC(5y)16.94%
1.3 Margins
The Profit Margin of COST (2.83%) is better than 85.37% 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 3.56%, COST is doing good in the industry, outperforming 63.41% 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 has a worse Gross Margin (12.50%) than 85.37% of its industry peers.
COST's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 3.56% | ||
| PM (TTM) | 2.83% | ||
| GM | 12.5% |
OM growth 3Y-2.94%
OM growth 5Y1.14%
PM growth 3Y2.67%
PM growth 5Y3.24%
GM growth 3Y-2.31%
GM growth 5Y-1.19%
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.
COST has about the same amout of shares outstanding than it did 1 year ago.
The number of shares outstanding for COST has been increased compared to 5 years ago.
Compared to 1 year ago, COST has an improved debt to assets ratio.
2.2 Solvency
An Altman-Z score of 9.57 indicates that COST is not in any danger for bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 9.57, COST belongs to the top of the industry, outperforming 97.56% of the companies in the same industry.
COST has a debt to FCF ratio of 0.93. This is a very positive value and a sign of high solvency as it would only need 0.93 years to pay back of all of its debts.
COST has a better Debt to FCF ratio (0.93) than 85.37% of its industry peers.
A Debt/Equity ratio of 0.27 indicates that COST is not too dependend on debt financing.
COST has a better Debt to Equity ratio (0.27) than 68.29% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.27 | ||
| Debt/FCF | 0.93 | ||
| Altman-Z | 9.57 |
ROIC/WACC2.52
WACC8.22%
2.3 Liquidity
A Current Ratio of 0.94 indicates that COST may have some problems paying its short term obligations.
COST has a Current ratio of 0.94. This is in the lower half of the industry: COST underperforms 60.98% of its industry peers.
COST has a Quick Ratio of 0.94. This is a bad value and indicates that COST is not financially healthy enough and could expect problems in meeting its short term obligations.
Looking at the Quick ratio, with a value of 0.45, COST is in line with its industry, outperforming 48.78% of the companies in the same industry.
COST does not score too well on the current and quick ratio evaluation. However, as it has 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 | 0.94 | ||
| Quick Ratio | 0.45 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 19.29% over the past year.
The Earnings Per Share has been growing by 15.71% on average over the past years. This is quite good.
COST shows a small growth in Revenue. In the last year, the Revenue has grown by 7.75%.
COST shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 11.34% yearly.
EPS 1Y (TTM)19.29%
EPS 3Y17.44%
EPS 5Y15.71%
EPS Q2Q%29.01%
Revenue 1Y (TTM)7.75%
Revenue growth 3Y13.26%
Revenue growth 5Y11.34%
Sales Q2Q%9.07%
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 10.00% yearly.
COST is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 6.79% yearly.
EPS Next Y17.46%
EPS Next 2Y13.05%
EPS Next 3Y12.21%
EPS Next 5Y10%
Revenue Next Year5.9%
Revenue Next 2Y6.61%
Revenue Next 3Y6.74%
Revenue Next 5Y6.79%
3.3 Evolution
The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past 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
The Price/Earnings ratio is 54.32, which means the current valuation is very expensive for COST.
Based on the Price/Earnings ratio, COST is valued a bit more expensive than 63.41% of the companies in the same industry.
When comparing the Price/Earnings ratio of COST to the average of the S&P500 Index (29.62), we can say COST is valued expensively.
Based on the Price/Forward Earnings ratio of 48.34, the valuation of COST can be described as expensive.
60.98% 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 21.22. COST is valued rather expensively when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 54.32 | ||
| Fwd PE | 48.34 |
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 70.73% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, COST is valued a bit more expensive than 63.41% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 52.4 | ||
| EV/EBITDA | 34.43 |
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.
COST's earnings are expected to grow with 12.21% in the coming years. This may justify a more expensive valuation.
PEG (NY)3.11
PEG (5Y)3.46
EPS Next 2Y13.05%
EPS Next 3Y12.21%
5. Dividend
5.1 Amount
COST has a yearly dividend return of 0.52%, which is pretty low.
COST's Dividend Yield is comparable with the industry average which is at 2.49.
With a Dividend Yield of 0.52, COST pays less dividend than the S&P500 average, which is at 2.24.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.52% |
5.2 History
On average, the dividend of COST grows each year by 12.39%, which is quite nice.
COST has paid a dividend for at least 10 years, which is a reliable track record.
The dividend of COST decreased in the last 3 years.
Dividend Growth(5Y)12.39%
Div Incr Years2
Div Non Decr Years2
5.3 Sustainability
125.18% of the earnings are spent on dividend by COST. This is not a sustainable payout ratio.
The dividend of COST is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP125.18%
EPS Next 2Y13.05%
EPS Next 3Y12.21%
COSTCO WHOLESALE CORP
NASDAQ:COST (9/6/2024, 8:06:24 PM)
After market: 875.95 -0.73 (-0.08%)876.68
-9.3 (-1.05%)
Chartmill FA Rating
GICS SectorConsumer Staples
GICS IndustryGroupConsumer Staples Distribution & Retail
GICS IndustryConsumer Staples Distribution & Retail
Earnings (Last)
Earnings (Next)
Inst Owners
Inst Owner Change
Ins Owners
Ins Owner Change
Market Cap388.67B
Analysts
Price Target
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.52% |
Dividend Growth(5Y)
DP
Div Incr Years
Div Non Decr Years
Ex-Date
Surprises & Revisions
EPS beat(2)
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PT rev (1m)
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EPS NQ rev (1m)
EPS NQ rev (3m)
EPS NY rev (1m)
EPS NY rev (3m)
Revenue NQ rev (1m)
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Revenue NY rev (1m)
Revenue NY rev (3m)
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 54.32 | ||
| Fwd PE | 48.34 | ||
| P/S | |||
| P/FCF | |||
| P/OCF | |||
| P/B | |||
| P/tB | |||
| EV/EBITDA |
EPS(TTM)
EY
EPS(NY)
Fwd EY
FCF(TTM)
FCFY
OCF(TTM)
OCFY
SpS
BVpS
TBVpS
PEG (NY)3.11
PEG (5Y)3.46
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.56% | ||
| ROE | 32.95% | ||
| ROCE | |||
| ROIC | |||
| ROICexc | |||
| ROICexgc | |||
| OM | 3.56% | ||
| PM (TTM) | 2.83% | ||
| GM | 12.5% | ||
| FCFM |
ROA(3y)
ROA(5y)
ROE(3y)
ROE(5y)
ROIC(3y)
ROIC(5y)
ROICexc(3y)
ROICexc(5y)
ROICexgc(3y)
ROICexgc(5y)
ROCE(3y)
ROCE(5y)
ROICexcg growth 3Y
ROICexcg growth 5Y
ROICexc growth 3Y
ROICexc growth 5Y
OM growth 3Y
OM growth 5Y
PM growth 3Y
PM growth 5Y
GM growth 3Y
GM growth 5Y
F-Score
Asset Turnover3.74
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.27 | ||
| Debt/FCF | |||
| Debt/EBITDA | |||
| Cap/Depr | |||
| Cap/Sales | |||
| Interest Coverage | |||
| Cash Conversion | |||
| Profit Quality | |||
| Current Ratio | 0.94 | ||
| Quick Ratio | 0.45 | ||
| Altman-Z |
F-Score
WACC
ROIC/WACC
Cap/Depr(3y)
Cap/Depr(5y)
Cap/Sales(3y)
Cap/Sales(5y)
Profit Quality(3y)
Profit Quality(5y)
High Growth Momentum
Growth
EPS 1Y (TTM)19.29%
EPS 3Y17.44%
EPS 5Y
EPS Q2Q%
EPS Next Y17.46%
EPS Next 2Y
EPS Next 3Y
EPS Next 5Y
Revenue 1Y (TTM)7.75%
Revenue growth 3Y13.26%
Revenue growth 5Y
Sales Q2Q%
Revenue Next Year
Revenue Next 2Y
Revenue Next 3Y
Revenue Next 5Y
EBIT growth 1Y
EBIT growth 3Y
EBIT growth 5Y
EBIT Next Year
EBIT Next 3Y
EBIT Next 5Y
FCF growth 1Y
FCF growth 3Y
FCF growth 5Y
OCF growth 1Y
OCF growth 3Y
OCF growth 5Y