952.89 USD
-7.89 (-0.82%)
950.1 USD
-2.79 (-0.29%)
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. While showing a medium growth rate, COST is valued expensive at the moment.
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.
- Each year in the past 5 years COST has been profitable.
- Each year in the past 5 years COST had a positive operating cash flow.
1.2 Ratios
- With an excellent Return On Assets value of 10.03%, COST belongs to the best of the industry, outperforming 84.21% of the companies in the same industry.
- COST has a better Return On Equity (27.40%) than 84.21% of its industry peers.
- The Return On Invested Capital of COST (19.55%) is better than 97.37% of its industry peers.
- COST had an Average Return On Invested Capital over the past 3 years of 19.04%. This is significantly below the industry average of 28.30%.
- The last Return On Invested Capital (19.55%) for COST is above the 3 year average (19.04%), which is a sign of increasing profitability.
| 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
- Looking at the Profit Margin, with a value of 2.96%, COST is in the better half of the industry, outperforming 73.68% of the companies in the same industry.
- 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.
- With a Gross Margin value of 12.88%, COST is not doing good in the industry: 81.58% of the companies in the same industry are doing better.
- 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 | 3.8% | ||
| 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.
- COST has more shares outstanding than it did 5 years ago.
- The debt/assets ratio for COST has been reduced compared to a year ago.
2.2 Solvency
- COST has an Altman-Z score of 9.11. This indicates that COST is financially healthy and has little risk of bankruptcy at the moment.
- With an excellent Altman-Z score value of 9.11, COST belongs to the best of the industry, outperforming 94.74% of the companies in the same industry.
- The Debt to FCF ratio of COST is 0.64, which is an excellent value as it means it would take COST, only 0.64 years of fcf income to pay off 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.
- COST has a Debt/Equity ratio of 0.19. This is a healthy value indicating a solid balance between debt and equity.
- The Debt to Equity ratio of COST (0.19) is better than 71.05% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.19 | ||
| Debt/FCF | 0.64 | ||
| Altman-Z | 9.11 |
ROIC/WACC2.23
WACC8.77%
2.3 Liquidity
- A Current Ratio of 1.04 indicates that COST should not have too much problems paying its short term obligations.
- The Current ratio of COST (1.04) is worse than 63.16% of its industry peers.
- A Quick Ratio of 0.53 indicates that COST may have some problems paying its short term obligations.
- COST has a Quick ratio (0.53) which is comparable to the rest of the industry.
| 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.
- The Earnings Per Share has been growing by 15.76% on average over the past years. This is quite good.
- COST shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 8.34%.
- Measured over the past years, COST shows a quite strong growth in Revenue. The Revenue has been growing by 10.54% on average per year.
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
- The Earnings Per Share is expected to grow by 9.37% on average over the next years. This is quite good.
- 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.
- 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 51.04, which means the current valuation is very expensive for COST.
- Based on the Price/Earnings ratio, COST is valued a bit more expensive than 71.05% of the companies in the same industry.
- The average S&P500 Price/Earnings ratio is at 28.60. COST is valued rather expensively when compared to this.
- COST is valuated quite expensively with a Price/Forward Earnings ratio of 41.89.
- Based on the Price/Forward Earnings ratio, COST is valued a bit more expensive than 60.53% of the companies in the same industry.
- COST's Price/Forward Earnings ratio indicates a rather expensive valuation when compared to the S&P500 average which is at 25.83.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 51.04 | ||
| Fwd PE | 41.89 |
4.2 Price Multiples
- Based on the Enterprise Value to EBITDA ratio, COST is valued a bit more expensive than 73.68% of the companies in the same industry.
- Based on the Price/Free Cash Flow ratio, COST is valued a bit more expensive than 63.16% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 46.91 | ||
| EV/EBITDA | 31.5 |
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 decent profitability rating of COST may justify a higher PE ratio.
PEG (NY)3.63
PEG (5Y)3.24
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.
- COST's Dividend Yield is a higher than the industry average which is at 0.73.
- 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
- On average, the dividend of COST grows each year by 7.97%, which is quite nice.
- 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%.