983.25 USD
+7.08 (+0.73%)
982 USD
-1.25 (-0.13%)
Overall COST gets a fundamental rating of 5 out of 10. We evaluated COST against 38 industry peers in the Consumer Staples Distribution & Retail industry. While COST belongs to the best of the industry regarding profitability, there are some minor concerns on its financial health. COST is valied quite expensively at the moment, while it does show a decent growth rate.
1. Profitability
1.1 Basic Checks
- COST had positive earnings in the past year.
- In the past year COST had a positive cash flow from operations.
- In the past 5 years COST has always been profitable.
- COST had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
- COST has a Return On Assets of 10.03%. This is amongst the best in the industry. COST outperforms 84.21% of its industry peers.
- The Return On Equity of COST (27.40%) is better than 84.21% of its industry peers.
- COST has a Return On Invested Capital of 19.55%. This is amongst the best in the industry. COST outperforms 97.37% of its industry peers.
- Measured over the past 3 years, the Average Return On Invested Capital 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
- COST's Profit Margin of 2.96% is fine compared to the rest of the industry. COST outperforms 73.68% of its industry peers.
- COST's Profit Margin has improved in the last couple of years.
- COST's Operating Margin of 3.80% is fine compared to the rest 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 Gross Margin of 12.88%. This is amonst the worse of the industry: COST underperforms 81.58% 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 | 3.8% | ||
| 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
- With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), COST 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
- The debt/assets ratio for COST has been reduced compared to a year ago.
2.2 Solvency
- COST has an Altman-Z score of 9.18. This indicates that COST is financially healthy and has little risk of bankruptcy at the moment.
- With an excellent Altman-Z score value of 9.18, COST belongs to the best of the industry, outperforming 94.74% of the companies in the same industry.
- 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.
- With an excellent Debt to FCF ratio value of 0.64, COST belongs to the best of the industry, outperforming 92.11% of the companies in the same industry.
- COST has a Debt/Equity ratio of 0.19. This is a healthy value indicating a solid balance between debt and equity.
- COST's Debt to Equity ratio of 0.19 is fine compared to the rest of the industry. COST outperforms 71.05% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.19 | ||
| Debt/FCF | 0.64 | ||
| Altman-Z | 9.18 |
ROIC/WACC2.23
WACC8.75%
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's Quick ratio of 0.53 is in line compared 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.
- 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%.
- COST shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 10.54% yearly.
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 Year8.04%
Revenue Next 2Y7.8%
Revenue Next 3Y7.56%
Revenue Next 5Y7.09%
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 decreasing.
- 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
- Based on the Price/Earnings ratio of 52.66, the valuation of COST can be described as expensive.
- Compared to the rest of the industry, the Price/Earnings ratio of COST indicates a slightly more expensive valuation: COST is more expensive than 71.05% of the companies listed in the same industry.
- The average S&P500 Price/Earnings ratio is at 27.21. COST is valued rather expensively when compared to this.
- With a Price/Forward Earnings ratio of 43.22, COST can be considered very expensive at the moment.
- 60.53% of the companies in the same industry are cheaper than COST, based on the Price/Forward Earnings ratio.
- COST's Price/Forward Earnings ratio indicates a rather expensive valuation when compared to the S&P500 average which is at 24.26.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 52.66 | ||
| Fwd PE | 43.22 |
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.
- COST's Price/Free Cash Flow ratio is a bit more expensive when compared to the industry. COST is more expensive than 63.16% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 48.4 | ||
| EV/EBITDA | 32.02 |
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)3.74
PEG (5Y)3.34
EPS Next 2Y11.77%
EPS Next 3Y11.31%
5. Dividend
5.1 Amount
- With a yearly dividend of 0.54%, COST is not a good candidate for dividend investing.
- COST's Dividend Yield is a higher than the industry average which is at 0.72.
- With a Dividend Yield of 0.54, COST pays less dividend than the S&P500 average, which is at 1.82.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.54% |
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
- COST pays out 27.04% of its income as dividend. This is a 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%.