COSTCO WHOLESALE CORP (COST) Stock Fundamental Analysis
NASDAQ:COST - Nasdaq - US22160K1051 - Common Stock - Currency: USD
Taking everything into account, COST scores 6 out of 10 in our fundamental rating. COST was compared to 40 industry peers in the Consumer Staples Distribution & Retail industry. Both the health and profitability get an excellent rating, making COST a very profitable company, without any liquidiy or solvency issues. COST is quite expensive at the moment. It does show a decent growth rate. These ratings could make COST a good candidate 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.
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
COST has a better Return On Assets (10.32%) than 97.44% of its industry peers.
With an excellent Return On Equity value of 30.98%, COST belongs to the best of the industry, outperforming 92.31% of the companies in the same industry.
COST's Return On Invested Capital of 20.26% is amongst the best of the industry. COST outperforms 100.00% of its industry peers.
COST had an Average Return On Invested Capital over the past 3 years of 18.60%. This is significantly above the industry average of 8.35%.
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
The Profit Margin of COST (2.93%) is better than 84.62% 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 3.67%, COST is doing good in the industry, outperforming 69.23% of the companies in the same industry.
COST's Operating Margin has improved in the last couple of years.
COST's Gross Margin of 12.67% is on the low side compared to the rest of the industry. COST is outperformed by 87.18% 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 | 3.67% | ||
| 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
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.
COST has more shares outstanding than it did 5 years ago.
COST has a better debt/assets ratio than last year.
2.2 Solvency
COST has an Altman-Z score of 9.93. 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 9.93, COST belongs to the top of the industry, outperforming 97.44% of the companies in the same industry.
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.
The Debt to FCF ratio of COST (1.15) is better than 89.74% of its industry peers.
COST has a Debt/Equity ratio of 0.23. This is a healthy value indicating a solid balance between debt and equity.
COST has a better Debt to Equity ratio (0.23) than 71.79% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.23 | ||
| Debt/FCF | 1.15 | ||
| Altman-Z | 9.93 |
ROIC/WACC2.25
WACC9.01%
2.3 Liquidity
COST has a Current 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.
Looking at the Current ratio, with a value of 0.98, COST is doing worse than 66.67% of the companies in the same industry.
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.
The Quick ratio of COST (0.43) is worse than 61.54% 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
The Earnings Per Share has grown by an nice 16.09% over the past year.
Measured over the past years, COST shows a quite strong growth in Earnings Per Share. The EPS has been growing by 15.11% on average per year.
Looking at the last year, COST shows a small growth in Revenue. The Revenue has grown by 5.35% in the last year.
COST shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 10.75% yearly.
EPS 1Y (TTM)16.09%
EPS 3Y14.32%
EPS 5Y15.11%
EPS Q2Q%12.85%
Revenue 1Y (TTM)5.35%
Revenue growth 3Y9.1%
Revenue growth 5Y10.75%
Sales Q2Q%7.53%
3.2 Future
The Earnings Per Share is expected to grow by 12.46% on average over the next years. This is quite good.
Based on estimates for the next years, COST will show a small growth in Revenue. The Revenue will grow by 6.52% on average per year.
EPS Next Y12.35%
EPS Next 2Y10.95%
EPS Next 3Y11.01%
EPS Next 5Y12.46%
Revenue Next Year6.88%
Revenue Next 2Y6.97%
Revenue Next 3Y6.73%
Revenue Next 5Y6.52%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
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
A Price/Earnings ratio of 60.78 indicates a quite expensive valuation of COST.
69.23% of the companies in the same industry are cheaper than COST, based on the Price/Earnings ratio.
COST is valuated expensively when we compare the Price/Earnings ratio to 29.63, which is the current average of the S&P500 Index.
COST is valuated quite expensively with a Price/Forward Earnings ratio of 50.74.
COST's Price/Forward Earnings ratio is a bit more expensive when compared to the industry. COST is more expensive than 61.54% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 22.68, COST is valued quite expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 60.78 | ||
| Fwd PE | 50.74 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, COST is valued a bit more expensive than the industry average as 71.79% of the companies are valued more cheaply.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of COST is on the same level as its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 91.63 | ||
| EV/EBITDA | 38.4 |
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)4.92
PEG (5Y)4.02
EPS Next 2Y10.95%
EPS Next 3Y11.01%
5. Dividend
5.1 Amount
COST has a yearly dividend return of 0.43%, which is pretty low.
Compared to an average industry Dividend Yield of 2.53, COST has a dividend in line with its industry peers.
Compared to an average S&P500 Dividend Yield of 2.29, COST's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.43% |
5.2 History
The dividend of COST is nicely growing with an annual growth rate of 53.89%!
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 2Y10.95%
EPS Next 3Y11.01%
1035.03
+0.2 (+0.02%)
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 Change0.08%
Ins Owners0.17%
Ins Owner Change2.09%
Market Cap459.45B
Analysts78.67
Price Target1060.47 (2.46%)
Short Float %1.33%
Short Ratio2.94
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.43% |
Yearly Dividend20.41
Dividend Growth(5Y)53.89%
DP114.19%
Div Incr Years2
Div Non Decr Years2
Ex-Date
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)3.4%
Min EPS beat(2)2.31%
Max EPS beat(2)4.5%
EPS beat(4)4
Avg EPS beat(4)3.26%
Min EPS beat(4)0.1%
Max EPS beat(4)6.12%
EPS beat(8)6
Avg EPS beat(8)0.4%
EPS beat(12)8
Avg EPS beat(12)0.54%
EPS beat(16)11
Avg EPS beat(16)1.58%
Revenue beat(2)0
Avg Revenue beat(2)-2.23%
Min Revenue beat(2)-2.61%
Max Revenue beat(2)-1.85%
Revenue beat(4)0
Avg Revenue beat(4)-2.2%
Min Revenue beat(4)-3.14%
Max Revenue beat(4)-1.21%
Revenue beat(8)0
Avg Revenue beat(8)-2.17%
Revenue beat(12)0
Avg Revenue beat(12)-1.91%
Revenue beat(16)3
Avg Revenue beat(16)-1.33%
PT rev (1m)-0.37%
PT rev (3m)11.25%
EPS NQ rev (1m)2.29%
EPS NQ rev (3m)1.93%
EPS NY rev (1m)0.75%
EPS NY rev (3m)2.23%
Revenue NQ rev (1m)0.59%
Revenue NQ rev (3m)0.22%
Revenue NY rev (1m)0.15%
Revenue NY rev (3m)-0.13%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 60.78 | ||
| Fwd PE | 50.74 | ||
| P/S | 1.78 | ||
| P/FCF | 91.63 | ||
| P/OCF | 46.19 | ||
| P/B | 18.79 | ||
| P/tB | 18.79 | ||
| EV/EBITDA | 38.4 |
EPS(TTM)17.03
EY1.65%
EPS(NY)20.4
Fwd EY1.97%
FCF(TTM)11.3
FCFY1.09%
OCF(TTM)22.41
OCFY2.17%
SpS583.03
BVpS55.08
TBVpS55.08
PEG (NY)4.92
PEG (5Y)4.02
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 | 9.93 |
F-Score8
WACC9.01%
ROIC/WACC2.25
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)16.09%
EPS 3Y14.32%
EPS 5Y15.11%
EPS Q2Q%12.85%
EPS Next Y12.35%
EPS Next 2Y10.95%
EPS Next 3Y11.01%
EPS Next 5Y12.46%
Revenue 1Y (TTM)5.35%
Revenue growth 3Y9.1%
Revenue growth 5Y10.75%
Sales Q2Q%7.53%
Revenue Next Year6.88%
Revenue Next 2Y6.97%
Revenue Next 3Y6.73%
Revenue Next 5Y6.52%
EBIT growth 1Y13.78%
EBIT growth 3Y8.31%
EBIT growth 5Y14.41%
EBIT Next Year39.64%
EBIT Next 3Y19.62%
EBIT Next 5Y17.81%
FCF growth 1Y75.87%
FCF growth 3Y7.27%
FCF growth 5Y14.57%
OCF growth 1Y47.51%
OCF growth 3Y8.17%
OCF growth 5Y12.27%