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 41 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. While showing a medium growth rate, COST is valued expensive at the moment. This makes COST very considerable for quality investing!
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.
COST had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
COST's Return On Assets of 10.41% is amongst the best of the industry. COST outperforms 95.12% of its industry peers.
The Return On Equity of COST (29.80%) is better than 90.24% of its industry peers.
Looking at the Return On Invested Capital, with a value of 20.16%, COST belongs to the top of the industry, outperforming 100.00% of the companies in the same industry.
The Average Return On Invested Capital over the past 3 years for COST is significantly above the industry average of 8.02%.
The 3 year average ROIC (18.60%) for COST is below the current ROIC(20.16%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.41% | ||
| ROE | 29.8% | ||
| ROIC | 20.16% |
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's Profit Margin of 2.89% is amongst the best of the industry. COST outperforms 82.93% of its industry peers.
COST's Profit Margin has improved in the last couple of years.
The Operating Margin of COST (3.69%) is better than 70.73% of its industry peers.
In the last couple of years the Operating Margin of COST has grown nicely.
The Gross Margin of COST (12.67%) is worse than 85.37% 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 | 3.69% | ||
| PM (TTM) | 2.89% | ||
| 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
With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), COST is creating some value.
Compared to 1 year ago, COST has about the same amount of shares outstanding.
The number of shares outstanding for COST has been increased compared to 5 years ago.
The debt/assets ratio for COST has been reduced compared to a year ago.
2.2 Solvency
An Altman-Z score of 10.20 indicates that COST is not in any danger for bankruptcy at the moment.
COST has a better Altman-Z score (10.20) than 97.56% of its industry peers.
The Debt to FCF ratio of COST is 0.83, which is an excellent value as it means it would take COST, only 0.83 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of COST (0.83) is better than 87.80% 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 63.41% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.23 | ||
| Debt/FCF | 0.83 | ||
| Altman-Z | 10.2 |
ROIC/WACC1.27
WACC15.82%
2.3 Liquidity
A Current Ratio of 1.00 indicates that COST may have some problems paying its short term obligations.
With a Current ratio value of 1.00, COST is not doing good in the industry: 63.41% of the companies in the same industry are doing better.
COST has a Quick Ratio of 1.00. 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 has a worse Quick ratio (0.49) than 63.41% 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 | 1 | ||
| Quick Ratio | 0.49 |
3. Growth
3.1 Past
COST shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 12.03%, which is quite good.
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 6.13% 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)12.03%
EPS 3Y14.32%
EPS 5Y15.11%
EPS Q2Q%2.55%
Revenue 1Y (TTM)6.13%
Revenue growth 3Y9.1%
Revenue growth 5Y10.75%
Sales Q2Q%9.04%
3.2 Future
Based on estimates for the next years, COST will show a quite strong growth in Earnings Per Share. The EPS will grow by 10.68% on average per year.
Based on estimates for the next years, COST will show a small growth in Revenue. The Revenue will grow by 6.74% on average per year.
EPS Next Y11.42%
EPS Next 2Y10.85%
EPS Next 3Y10.69%
EPS Next 5Y10.68%
Revenue Next Year7.68%
Revenue Next 2Y7.46%
Revenue Next 3Y7.15%
Revenue Next 5Y6.74%
3.3 Evolution
Although the future EPS growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.
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
The Price/Earnings ratio is 60.53, which means the current valuation is very expensive for COST.
COST's Price/Earnings ratio is a bit more expensive when compared to the industry. COST is more expensive than 68.29% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 26.60. COST is valued rather expensively when compared to this.
The Price/Forward Earnings ratio is 50.92, which means the current valuation is very expensive for COST.
Compared to the rest of the industry, the Price/Forward Earnings ratio of COST is on the same level as its industry peers.
COST's Price/Forward Earnings ratio indicates a rather expensive valuation when compared to the S&P500 average which is at 22.43.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 60.53 | ||
| Fwd PE | 50.92 |
4.2 Price Multiples
75.61% of the companies in the same industry are cheaper than COST, based on the Enterprise Value to EBITDA ratio.
COST's Price/Free Cash Flow ratio is a bit more expensive when compared to the industry. COST is more expensive than 68.29% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 66.43 | ||
| EV/EBITDA | 37.33 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
The excellent profitability rating of COST may justify a higher PE ratio.
PEG (NY)5.3
PEG (5Y)4.01
EPS Next 2Y10.85%
EPS Next 3Y10.69%
5. Dividend
5.1 Amount
COST has a yearly dividend return of 0.51%, which is pretty low.
COST's Dividend Yield is a higher than the industry average which is at 2.30.
Compared to an average S&P500 Dividend Yield of 2.36, COST's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.51% |
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.
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
COST pays out 20.26% of its income as dividend. This is a sustainable payout ratio.
COST's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP20.26%
EPS Next 2Y10.85%
EPS Next 3Y10.69%
1036.82
+2.48 (+0.24%)
Chartmill FA Rating
GICS SectorConsumer Staples
GICS IndustryGroupConsumer Staples Distribution & Retail
GICS IndustryConsumer Staples Distribution & Retail
Earnings (Last)
Earnings (Next)
Inst Owners71.84%
Inst Owner Change2.15%
Ins Owners0.09%
Ins Owner Change-0.86%
Market Cap460.02B
Analysts78.3
Price Target1090.42 (5.17%)
Short Float %1.36%
Short Ratio2.38
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.51% |
Yearly Dividend20.41
Dividend Growth(5Y)53.89%
DP20.26%
Div Incr Years2
Div Non Decr Years2
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)0.23%
Min EPS beat(2)-4.04%
Max EPS beat(2)4.5%
EPS beat(4)3
Avg EPS beat(4)0.72%
Min EPS beat(4)-4.04%
Max EPS beat(4)4.5%
EPS beat(8)5
Avg EPS beat(8)-0.21%
EPS beat(12)7
Avg EPS beat(12)-0.16%
EPS beat(16)11
Avg EPS beat(16)2.22%
Revenue beat(2)0
Avg Revenue beat(2)-1.45%
Min Revenue beat(2)-1.85%
Max Revenue beat(2)-1.05%
Revenue beat(4)0
Avg Revenue beat(4)-1.68%
Min Revenue beat(4)-2.61%
Max Revenue beat(4)-1.05%
Revenue beat(8)0
Avg Revenue beat(8)-1.99%
Revenue beat(12)0
Avg Revenue beat(12)-1.91%
Revenue beat(16)2
Avg Revenue beat(16)-1.41%
PT rev (1m)-0.79%
PT rev (3m)2.82%
EPS NQ rev (1m)0.02%
EPS NQ rev (3m)0.23%
EPS NY rev (1m)-0.06%
EPS NY rev (3m)-0.83%
Revenue NQ rev (1m)0.35%
Revenue NQ rev (3m)1.14%
Revenue NY rev (1m)0.14%
Revenue NY rev (3m)0.75%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 60.53 | ||
| Fwd PE | 50.92 | ||
| P/S | 1.74 | ||
| P/FCF | 66.43 | ||
| P/OCF | 38.45 | ||
| P/B | 17.99 | ||
| P/tB | 17.99 | ||
| EV/EBITDA | 37.33 |
EPS(TTM)17.13
EY1.65%
EPS(NY)20.36
Fwd EY1.96%
FCF(TTM)15.61
FCFY1.51%
OCF(TTM)26.97
OCFY2.6%
SpS595.22
BVpS57.65
TBVpS57.65
PEG (NY)5.3
PEG (5Y)4.01
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 10.41% | ||
| ROE | 29.8% | ||
| ROCE | 26.92% | ||
| ROIC | 20.16% | ||
| ROICexc | 31.66% | ||
| ROICexgc | 31.66% | ||
| OM | 3.69% | ||
| PM (TTM) | 2.89% | ||
| GM | 12.67% | ||
| FCFM | 2.62% |
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 Turnover3.61
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.23 | ||
| Debt/FCF | 0.83 | ||
| Debt/EBITDA | 0.48 | ||
| Cap/Depr | 217.05% | ||
| Cap/Sales | 1.91% | ||
| Interest Coverage | 79.93 | ||
| Cash Conversion | 99.11% | ||
| Profit Quality | 90.87% | ||
| Current Ratio | 1 | ||
| Quick Ratio | 0.49 | ||
| Altman-Z | 10.2 |
F-Score8
WACC15.82%
ROIC/WACC1.27
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)12.03%
EPS 3Y14.32%
EPS 5Y15.11%
EPS Q2Q%2.55%
EPS Next Y11.42%
EPS Next 2Y10.85%
EPS Next 3Y10.69%
EPS Next 5Y10.68%
Revenue 1Y (TTM)6.13%
Revenue growth 3Y9.1%
Revenue growth 5Y10.75%
Sales Q2Q%9.04%
Revenue Next Year7.68%
Revenue Next 2Y7.46%
Revenue Next 3Y7.15%
Revenue Next 5Y6.74%
EBIT growth 1Y14.64%
EBIT growth 3Y8.31%
EBIT growth 5Y14.41%
EBIT Next Year39.65%
EBIT Next 3Y19.84%
EBIT Next 5Y15.88%
FCF growth 1Y26.48%
FCF growth 3Y7.27%
FCF growth 5Y14.57%
OCF growth 1Y25.49%
OCF growth 3Y8.17%
OCF growth 5Y12.27%