COSTCO WHOLESALE CORP (COST) Stock Fundamental Analysis
NASDAQ:COST - Nasdaq - US22160K1051 - Common Stock - Currency: USD
We assign a fundamental rating of 6 out of 10 to COST. COST was compared to 40 industry peers in the Consumer Staples Distribution & Retail industry. COST has outstanding health and profitabily ratings, belonging to the best of the industry. This is a solid base for any company. 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
In the past year COST was profitable.
In the past year COST had a positive cash flow from operations.
Each year in the past 5 years COST has been profitable.
In the past 5 years COST always reported a positive cash flow from operatings.
1.2 Ratios
COST has a Return On Assets of 10.39%. This is amongst the best in the industry. COST outperforms 95.00% of its industry peers.
COST has a Return On Equity of 28.91%. This is amongst the best in the industry. COST outperforms 85.00% of its industry peers.
The Return On Invested Capital of COST (19.92%) is better than 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 last Return On Invested Capital (19.92%) for COST is above the 3 year average (18.60%), which is a sign of increasing profitability.
| 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 80.00% of the companies in the same industry.
In the last couple of years the Profit Margin of COST has grown nicely.
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.
COST's Operating Margin has improved in the last couple of years.
The Gross Margin of COST (12.78%) is worse than 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
With a Return on Invested Capital (ROIC) well above the Cost of Capital (WACC), COST is creating value.
COST has about the same amout of shares outstanding than it did 1 year ago.
COST has more shares outstanding than it did 5 years ago.
The debt/assets ratio for COST has been reduced compared to a year ago.
2.2 Solvency
COST has an Altman-Z score of 9.64. This indicates that COST is financially healthy and has little risk of bankruptcy at the moment.
Looking at the Altman-Z score, with a value of 9.64, COST belongs to the top of the industry, outperforming 97.50% of the companies in the same industry.
The Debt to FCF ratio of COST is 0.78, which is an excellent value as it means it would take COST, only 0.78 years of fcf income to pay off all of its debts.
COST has a Debt to FCF ratio of 0.78. This is amongst the best in the industry. COST outperforms 90.00% of its industry peers.
A Debt/Equity ratio of 0.21 indicates that COST is not too dependend on debt financing.
The Debt to Equity ratio of COST (0.21) is better than 67.50% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.21 | ||
| Debt/FCF | 0.78 | ||
| Altman-Z | 9.64 |
ROIC/WACC2.28
WACC8.73%
2.3 Liquidity
A Current Ratio of 1.02 indicates that COST should not have too much problems paying its short term obligations.
COST has a Current ratio of 1.02. This is in the lower half of the industry: COST underperforms 62.50% 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.
With a Quick ratio value of 0.52, COST perfoms like the industry average, outperforming 47.50% of the companies in the same 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
The Earnings Per Share has grown by an nice 9.23% over the past year.
The Earnings Per Share has been growing by 15.11% on average over the past years. This is quite good.
COST shows a small growth in Revenue. In the last year, the Revenue has grown by 5.94%.
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
Based on estimates for the next years, COST will show a quite strong growth in Earnings Per Share. The EPS will grow by 9.41% on average per year.
Based on estimates for the next years, COST will show a small growth in Revenue. The Revenue will grow by 6.62% on average per year.
EPS Next Y11.92%
EPS Next 2Y11.11%
EPS Next 3Y10.84%
EPS Next 5Y9.41%
Revenue Next Year7.69%
Revenue Next 2Y7.6%
Revenue Next 3Y7.49%
Revenue Next 5Y6.62%
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 54.03, the valuation of COST can be described as expensive.
72.50% of the companies in the same industry are cheaper than COST, based on the Price/Earnings ratio.
When comparing the Price/Earnings ratio of COST to the average of the S&P500 Index (26.82), we can say COST is valued expensively.
With a Price/Forward Earnings ratio of 46.57, COST can be considered very expensive at the moment.
Compared to the rest of the industry, the Price/Forward Earnings ratio of COST indicates a slightly more expensive valuation: COST is more expensive than 62.50% of the companies listed in the same industry.
When comparing the Price/Forward Earnings ratio of COST to the average of the S&P500 Index (36.21), we can say COST is valued slightly more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 54.03 | ||
| Fwd PE | 46.57 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, COST is valued a bit more expensive than the industry average as 77.50% 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 | 57.73 | ||
| EV/EBITDA | 33.14 |
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.
COST has an outstanding profitability rating, which may justify a higher PE ratio.
PEG (NY)4.53
PEG (5Y)3.58
EPS Next 2Y11.11%
EPS Next 3Y10.84%
5. Dividend
5.1 Amount
With a yearly dividend of 0.55%, COST is not a good candidate for dividend investing.
COST's Dividend Yield is a higher than the industry average which is at 2.08.
With a Dividend Yield of 0.55, COST pays less dividend than the S&P500 average, which is at 2.39.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.55% |
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
COST pays out 19.69% 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.
DP19.69%
EPS Next 2Y11.11%
EPS Next 3Y10.84%
952.52
+12.88 (+1.37%)
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 Change-1.94%
Ins Owners0.09%
Ins Owner Change-1.32%
Market Cap422.42B
Analysts78.14
Price Target1090.38 (14.47%)
Short Float %1.1%
Short Ratio2.31
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.55% |
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)0.1%
EPS NQ rev (1m)0.09%
EPS NQ rev (3m)-0.36%
EPS NY rev (1m)0.02%
EPS NY rev (3m)0.39%
Revenue NQ rev (1m)0.03%
Revenue NQ rev (3m)0.61%
Revenue NY rev (1m)0.02%
Revenue NY rev (3m)0.14%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 54.03 | ||
| Fwd PE | 46.57 | ||
| P/S | 1.57 | ||
| P/FCF | 57.73 | ||
| P/OCF | 34 | ||
| P/B | 15.57 | ||
| P/tB | 15.57 | ||
| EV/EBITDA | 33.14 |
EPS(TTM)17.63
EY1.85%
EPS(NY)20.46
Fwd EY2.15%
FCF(TTM)16.5
FCFY1.73%
OCF(TTM)28.02
OCFY2.94%
SpS606.06
BVpS61.16
TBVpS61.16
PEG (NY)4.53
PEG (5Y)3.58
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 | 9.64 |
F-Score7
WACC8.73%
ROIC/WACC2.28
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 Y11.92%
EPS Next 2Y11.11%
EPS Next 3Y10.84%
EPS Next 5Y9.41%
Revenue 1Y (TTM)5.94%
Revenue growth 3Y9.1%
Revenue growth 5Y10.75%
Sales Q2Q%8.02%
Revenue Next Year7.69%
Revenue Next 2Y7.6%
Revenue Next 3Y7.49%
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%