COSTCO WHOLESALE CORP (COST) Stock Fundamental Analysis
USA - NASDAQ:COST - US22160K1051 - Common Stock
967.9 USD
+3.58 (+0.37%)
967.4 USD
-0.5 (-0.05%)
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 valied quite expensively at the moment, while it does show a decent growth rate. With these ratings, COST could be worth investigating further for quality investing!.
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 10.39%. This is amongst the best in the industry. COST outperforms 87.50% of its industry peers.
Looking at the Return On Equity, with a value of 28.91%, COST belongs to the top of the industry, outperforming 85.00% of the companies in the same industry.
COST's Return On Invested Capital of 19.92% 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 8.47%.
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
Looking at the Profit Margin, with a value of 2.92%, COST is in the better half of the industry, outperforming 72.50% of the companies in the same industry.
COST's Profit Margin has improved in the last couple of years.
COST has a Operating Margin of 3.75%. This is in the better half of the industry: COST outperforms 70.00% of its industry peers.
In the last couple of years the Operating Margin of COST has grown nicely.
With a Gross Margin value of 12.78%, COST is not doing good in the industry: 82.50% of the companies in the same industry are doing better.
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
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), COST is creating value.
Compared to 1 year ago, COST has about the same amount of shares outstanding.
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 9.72. This indicates that COST is financially healthy and has little risk of bankruptcy at the moment.
The Altman-Z score of COST (9.72) is better than 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.
With an excellent Debt to FCF ratio value of 0.78, COST belongs to the best of the industry, outperforming 87.50% of the companies in the same industry.
A Debt/Equity ratio of 0.21 indicates that COST is not too dependend on debt financing.
COST has a Debt to Equity ratio of 0.21. This is in the better half of the industry: COST outperforms 65.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.21 | ||
| Debt/FCF | 0.78 | ||
| Altman-Z | 9.72 |
ROIC/WACC2.32
WACC8.57%
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 70.00% of its industry peers.
COST has a Quick Ratio of 1.02. 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 (0.52) is comparable to the rest of the industry.
COST does not score too well on the current and quick ratio evaluation. However, as it has 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.
COST shows a small growth in Revenue. In the last year, the Revenue has grown by 5.94%.
Measured over the past years, COST shows a quite strong growth in Revenue. The Revenue has been growing by 10.75% on average per year.
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 9.40% 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 Y11.86%
EPS Next 2Y11.17%
EPS Next 3Y10.86%
EPS Next 5Y9.4%
Revenue Next Year7.75%
Revenue Next 2Y7.62%
Revenue Next 3Y7.48%
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
The Price/Earnings ratio is 54.90, which means the current valuation is very expensive for 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 75.00% of the companies listed in the same industry.
When comparing the Price/Earnings ratio of COST to the average of the S&P500 Index (27.30), we can say COST is valued expensively.
With a Price/Forward Earnings ratio of 47.26, COST can be considered very expensive at the moment.
62.50% of the companies in the same industry are cheaper than COST, based on the Price/Forward Earnings ratio.
The average S&P500 Price/Forward Earnings ratio is at 22.73. COST is valued rather expensively when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 54.9 | ||
| Fwd PE | 47.26 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, COST is valued a bit more expensive than the industry average as 75.00% of the companies are valued more cheaply.
COST's Price/Free Cash Flow ratio is a bit more expensive when compared to the industry. COST is more expensive than 70.00% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 58.66 | ||
| EV/EBITDA | 33.68 |
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)4.63
PEG (5Y)3.63
EPS Next 2Y11.17%
EPS Next 3Y10.86%
5. Dividend
5.1 Amount
COST has a yearly dividend return of 0.54%, which is pretty low.
COST's Dividend Yield is a higher than the industry average which is at 2.01.
With a Dividend Yield of 0.54, COST pays less dividend than the S&P500 average, which is at 2.41.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.54% |
5.2 History
On average, the dividend of COST grows each year by 53.89%, which is quite nice.
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
19.69% of the earnings are spent on dividend by COST. This is a low number and sustainable payout ratio.
COST's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP19.69%
EPS Next 2Y11.17%
EPS Next 3Y10.86%
967.9
+3.58 (+0.37%)
Chartmill FA Rating
GICS SectorConsumer Staples
GICS IndustryGroupConsumer Staples Distribution & Retail
GICS IndustryConsumer Staples Distribution & Retail
Earnings (Last)
Earnings (Next)
Inst Owners71.83%
Inst Owner Change-1.51%
Ins Owners0.09%
Ins Owner Change0.02%
Market Cap429.24B
Analysts78.14
Price Target1089.82 (12.6%)
Short Float %1.33%
Short Ratio2.71
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.54% |
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)-0.05%
PT rev (3m)-0.92%
EPS NQ rev (1m)-0.07%
EPS NQ rev (3m)-0.06%
EPS NY rev (1m)-0.05%
EPS NY rev (3m)0.4%
Revenue NQ rev (1m)0.19%
Revenue NQ rev (3m)0.27%
Revenue NY rev (1m)0.05%
Revenue NY rev (3m)0.01%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 54.9 | ||
| Fwd PE | 47.26 | ||
| P/S | 1.6 | ||
| P/FCF | 58.66 | ||
| P/OCF | 34.54 | ||
| P/B | 15.82 | ||
| P/tB | 15.82 | ||
| EV/EBITDA | 33.68 |
EPS(TTM)17.63
EY1.82%
EPS(NY)20.48
Fwd EY2.12%
FCF(TTM)16.5
FCFY1.7%
OCF(TTM)28.02
OCFY2.89%
SpS606.06
BVpS61.16
TBVpS61.16
PEG (NY)4.63
PEG (5Y)3.63
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 | 9.72 |
F-Score7
WACC8.57%
ROIC/WACC2.32
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 Y11.86%
EPS Next 2Y11.17%
EPS Next 3Y10.86%
EPS Next 5Y9.4%
Revenue 1Y (TTM)5.94%
Revenue growth 3Y9.1%
Revenue growth 5Y10.75%
Sales Q2Q%8.02%
Revenue Next Year7.75%
Revenue Next 2Y7.62%
Revenue Next 3Y7.48%
Revenue Next 5Y6.62%
EBIT growth 1Y11.75%
EBIT growth 3Y8.31%
EBIT growth 5Y14.41%
EBIT Next Year40.12%
EBIT Next 3Y19.9%
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%