COSTCO WHOLESALE CORP (NASDAQ:COST) Excels with High ROIC and Strong Cash Generation in Caviar Cruise Screen

The Caviar Cruise stock screening method is a structured way to find good investment options. This approach looks for companies showing steady increases in sales and earnings, good profits on the money invested, low debt, and the ability to turn profits into cash. The system highlights companies with lasting market positions and effective operations, focusing on holding for the long term instead of quick trades. By using these strict checks, investors can find companies with the basic soundness to provide lasting worth.

Financial Performance and Growth Measures

COSTCO WHOLESALE CORP (NASDAQ:COST) shows strong growth features that match good investment standards. The company has seen steady increases in important business measures:

• Revenue growth (5-year average): 6.13%
• EBIT growth (5-year average): 11.20%
• EBIT growth is higher than revenue growth by about 5 percentage points

The company's capacity to increase earnings more quickly than sales points to better operational effectiveness and possible control over pricing. This difference between EBIT and revenue growth indicates COSTCO is making good use of its size, a sign of good businesses that can grow earnings while keeping a strong market position.

Earnings and Use of Capital

COSTCO shows outstanding profits on capital, a key measure for investors looking for companies that use shareholder money effectively:

• Return on Invested Capital (without cash, goodwill, and intangibles): 31.62%
• This is much higher than the Caviar Cruise minimum of 15%

The notable ROIC number shows COSTCO's skill in creating large profits from its business assets. This degree of capital effectiveness often points to lasting market advantages, as the company regularly earns profits well beyond its capital costs, building real economic value for shareholders over long periods.

Financial Stability and Cash Generation

The company keeps a careful financial setup with strong cash generation:

• Debt-to-Free Cash Flow ratio: 0.73
• Average Profit Quality (5-year): 92.22%

COSTCO's small debt load compared to cash flow gives it important financial room and safety. The company could pay off all its debt in under a year using existing free cash flow. The high profit quality percentage shows COSTCO successfully turns accounting profits into real cash, with 92% of net income becoming free cash flow over the last five years.

Basic Analysis Summary

According to the full basic analysis report, COSTCO gets a 6 out of 10 total score, with especially good results in earnings (8/10) and financial stability (7/10). The company does very well in profit measures, with a ROIC of 19.54% beating all others in its industry. While the stock price seems high with a P/E ratio of 50.83, this extra cost might be reasonable given the company's special operational traits and history of steady results.

Good Investment Points

Beyond the numbers, COSTCO has several non-number qualities that interest quality investors:

• The membership system creates repeat sales and customer commitment
• Worldwide presence on many continents offers variety
• Straightforward, easy-to-grasp business method centered on high sales volume with small profit per item
• Strong brand awareness and ability to set prices in the wholesale retail sector
• Stable operations that have shown reliability during different economic periods

The company's move into online sales and foreign markets sets it up for future growth, while its main warehouse model keeps protective features during economic declines.

For investors looking for more good investment choices found through the Caviar Cruise method, see the full screening outcomes to review other companies meeting these strict quality levels.

Disclaimer: This analysis is for information only and is not investment advice, a suggestion, or a support for any security. Investors should do their own research and talk to financial experts before making investment choices. Past results do not ensure future outcomes.