COSTCO WHOLESALE CORP (COST) Stock Fundamental Analysis
NASDAQ:COST - Nasdaq - US22160K1051 - Common Stock - Currency: USD
Overall COST gets a fundamental rating of 6 out of 10. We evaluated COST against 40 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.
In the past year COST had a positive cash flow from operations.
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
The Return On Assets of COST (10.39%) is better than 95.00% of its industry peers.
COST has a better Return On Equity (28.91%) than 85.00% of its industry peers.
COST has a Return On Invested Capital of 19.92%. This is amongst the best in 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 8.23%.
The 3 year average ROIC (18.60%) for COST is below the current ROIC(19.92%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.39% | ||
| ROE | 28.91% | ||
| ROIC | 19.92% |
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
COST has a better Profit Margin (2.92%) than 80.00% of its industry peers.
COST's Profit Margin has improved in the last couple of years.
With a decent Operating Margin value of 3.75%, COST is doing good in the industry, outperforming 70.00% of the companies in the same industry.
In the last couple of years the Operating Margin of COST has grown nicely.
COST has a Gross Margin of 12.78%. This is amonst the worse of the industry: COST underperforms 85.00% 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 | 3.75% | ||
| PM (TTM) | 2.92% | ||
| GM | 12.78% |
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
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.
Compared to 5 years ago, COST has more shares outstanding
Compared to 1 year ago, COST has an improved debt to assets ratio.
2.2 Solvency
COST has an Altman-Z score of 9.83. This indicates that COST is financially healthy and has little risk of bankruptcy at the moment.
COST's Altman-Z score of 9.83 is amongst the best of the industry. COST outperforms 97.50% of its industry peers.
COST has a debt to FCF ratio of 0.78. This is a very positive value and a sign of high solvency as it would only need 0.78 years to pay back of all of its debts.
COST's Debt to FCF ratio of 0.78 is amongst the best of the industry. COST outperforms 90.00% of its industry peers.
COST has a Debt/Equity ratio of 0.21. This is a healthy value indicating a solid balance between debt and equity.
COST's Debt to Equity ratio of 0.21 is fine compared to the rest of the industry. COST outperforms 67.50% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.21 | ||
| Debt/FCF | 0.78 | ||
| Altman-Z | 9.83 |
ROIC/WACC2.26
WACC8.8%
2.3 Liquidity
A Current Ratio of 1.02 indicates that COST should not have too much problems paying its short term obligations.
COST's Current ratio of 1.02 is on the low side compared to the rest of the industry. COST is outperformed by 62.50% of its industry peers.
A Quick Ratio of 0.52 indicates that COST may have some problems paying its short term obligations.
With a Quick ratio value of 0.52, COST perfoms like the industry average, outperforming 50.00% of the companies in the same industry.
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 | 1.02 | ||
| Quick Ratio | 0.52 |
3. Growth
3.1 Past
COST shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 9.23%, which is quite good.
COST shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 15.11% yearly.
Looking at the last year, COST shows a small growth in Revenue. The Revenue has grown by 5.94% in the last year.
The Revenue has been growing by 10.75% on average over the past years. This is quite good.
EPS 1Y (TTM)9.23%
EPS 3Y14.32%
EPS 5Y15.11%
EPS Q2Q%13.23%
Revenue 1Y (TTM)5.94%
Revenue growth 3Y9.1%
Revenue growth 5Y10.75%
Sales Q2Q%8.02%
3.2 Future
The Earnings Per Share is expected to grow by 9.41% 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 6.62% on average per year.
EPS Next Y11.9%
EPS Next 2Y11.08%
EPS Next 3Y10.72%
EPS Next 5Y9.41%
Revenue Next Year7.68%
Revenue Next 2Y7.56%
Revenue Next 3Y7.37%
Revenue Next 5Y6.62%
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
A Price/Earnings ratio of 55.72 indicates a quite expensive valuation of COST.
Compared to the rest of the industry, the Price/Earnings ratio of COST indicates a slightly more expensive valuation: COST is more expensive than 72.50% of the companies listed in the same industry.
Compared to an average S&P500 Price/Earnings ratio of 27.28, COST is valued quite expensively.
The Price/Forward Earnings ratio is 48.04, which means the current valuation is very expensive for COST.
COST's Price/Forward Earnings ratio is a bit more expensive when compared to the industry. COST is more expensive than 62.50% of the companies in the same industry.
COST is valuated expensively when we compare the Price/Forward Earnings ratio to 21.76, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 55.72 | ||
| Fwd PE | 48.04 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of COST indicates a slightly more expensive valuation: COST is more expensive than 77.50% of the companies listed in the same industry.
Compared to the rest of the industry, the Price/Free Cash Flow ratio of COST indicates a slightly more expensive valuation: COST is more expensive than 72.50% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 59.57 | ||
| EV/EBITDA | 34.34 |
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)4.68
PEG (5Y)3.69
EPS Next 2Y11.08%
EPS Next 3Y10.72%
5. Dividend
5.1 Amount
With a yearly dividend of 0.53%, COST is not a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 2.08, COST pays a bit more dividend than its industry peers.
Compared to an average S&P500 Dividend Yield of 2.42, COST's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.53% |
5.2 History
The dividend of COST is nicely growing with an annual growth rate of 53.89%!
COST has paid a dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)53.89%
Div Incr Years0
Div Non Decr Years0
5.3 Sustainability
COST pays out 19.69% of its income as dividend. This is a sustainable payout ratio.
The dividend of COST is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.
DP19.69%
EPS Next 2Y11.08%
EPS Next 3Y10.72%
982.36
-3.6 (-0.37%)
Chartmill FA Rating
GICS SectorConsumer Staples
GICS IndustryGroupConsumer Staples Distribution & Retail
GICS IndustryConsumer Staples Distribution & Retail
Earnings (Last)
Earnings (Next)
Inst Owners71.81%
Inst Owner Change2.07%
Ins Owners0.09%
Ins Owner Change-0.81%
Market Cap435.85B
Analysts77.78
Price Target1090.62 (11.02%)
Short Float %1.16%
Short Ratio2.47
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.53% |
Yearly Dividend20.41
Dividend Growth(5Y)53.89%
DP19.69%
Div Incr Years0
Div Non Decr Years0
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-2.51%
Min EPS beat(2)-4.04%
Max EPS beat(2)-0.98%
EPS beat(4)2
Avg EPS beat(4)0.45%
Min EPS beat(4)-4.04%
Max EPS beat(4)4.5%
EPS beat(8)5
Avg EPS beat(8)1.26%
EPS beat(12)6
Avg EPS beat(12)-0.44%
EPS beat(16)10
Avg EPS beat(16)1.2%
Revenue beat(2)0
Avg Revenue beat(2)-1.49%
Min Revenue beat(2)-1.94%
Max Revenue beat(2)-1.05%
Revenue beat(4)0
Avg Revenue beat(4)-1.86%
Min Revenue beat(4)-2.61%
Max Revenue beat(4)-1.05%
Revenue beat(8)0
Avg Revenue beat(8)-1.78%
Revenue beat(12)0
Avg Revenue beat(12)-2.05%
Revenue beat(16)1
Avg Revenue beat(16)-1.63%
PT rev (1m)0.02%
PT rev (3m)0.53%
EPS NQ rev (1m)-0.49%
EPS NQ rev (3m)-0.65%
EPS NY rev (1m)0.43%
EPS NY rev (3m)-0.4%
Revenue NQ rev (1m)0.58%
Revenue NQ rev (3m)0.68%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.64%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 55.72 | ||
| Fwd PE | 48.04 | ||
| P/S | 1.62 | ||
| P/FCF | 59.57 | ||
| P/OCF | 35.08 | ||
| P/B | 16.07 | ||
| P/tB | 16.07 | ||
| EV/EBITDA | 34.34 |
EPS(TTM)17.63
EY1.79%
EPS(NY)20.45
Fwd EY2.08%
FCF(TTM)16.49
FCFY1.68%
OCF(TTM)28.01
OCFY2.85%
SpS605.79
BVpS61.14
TBVpS61.14
PEG (NY)4.68
PEG (5Y)3.69
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.39% | ||
| ROE | 28.91% | ||
| ROCE | 26.6% | ||
| ROIC | 19.92% | ||
| ROICexc | 32.76% | ||
| ROICexgc | 32.76% | ||
| OM | 3.75% | ||
| PM (TTM) | 2.92% | ||
| GM | 12.78% | ||
| FCFM | 2.72% |
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-Score7
Asset Turnover3.56
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.21 | ||
| Debt/FCF | 0.78 | ||
| Debt/EBITDA | 0.46 | ||
| Cap/Depr | 216.67% | ||
| Cap/Sales | 1.9% | ||
| Interest Coverage | 84.03 | ||
| Cash Conversion | 99.87% | ||
| Profit Quality | 93.29% | ||
| Current Ratio | 1.02 | ||
| Quick Ratio | 0.52 | ||
| Altman-Z | 9.83 |
F-Score7
WACC8.8%
ROIC/WACC2.26
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)9.23%
EPS 3Y14.32%
EPS 5Y15.11%
EPS Q2Q%13.23%
EPS Next Y11.9%
EPS Next 2Y11.08%
EPS Next 3Y10.72%
EPS Next 5Y9.41%
Revenue 1Y (TTM)5.94%
Revenue growth 3Y9.1%
Revenue growth 5Y10.75%
Sales Q2Q%8.02%
Revenue Next Year7.68%
Revenue Next 2Y7.56%
Revenue Next 3Y7.37%
Revenue Next 5Y6.62%
EBIT growth 1Y11.75%
EBIT growth 3Y8.31%
EBIT growth 5Y14.41%
EBIT Next Year39.54%
EBIT Next 3Y19.39%
EBIT Next 5Y14.7%
FCF growth 1Y25.66%
FCF growth 3Y7.27%
FCF growth 5Y14.57%
OCF growth 1Y26.17%
OCF growth 3Y8.17%
OCF growth 5Y12.27%