10Y annualized return is
excellent
at 21.3% per year
COST has met or exceeded earnings expectations in
the majority of
recent quarters (7/10)
Moderate Price to Sales Ratio
Strong Return on Equity
Low Debt Levels
Strong Interest Coverage
Strong Membership Growth
E-commerce Performance
Operational Efficiency
Expansion Plans
Innovation in Product Offering
Digital Strategy and Retail Media
High P/E Ratio
High EV/EBITDA Ratio
Low Gross and Operating Profit Margins
Liquidity Concerns
Slight Decline in Renewal Rates
Challenges with International Performance
Costco demonstrates a strong business model supported by robust membership growth and operational efficiency. However, slight declines in renewal rates and decelerating international performance present challenges. Future prospects remain positive with ambitious expansion plans and a commitment to innovation and digital growth.
Analysis Date: December 12, 2024
Last Updated: March 11, 2025
Past performance does not guarantee future results. The data presented is indicative and may not be updated in real-time.
Costco Wholesale Corporation is a membership-based store where people can buy a wide variety of products at lower prices. Customers pay a fee to join and can then shop for groceries, electronics, clothing, and more, all in one place. Costco also has services like pharmacies, food courts, and gas stations. With locations in many countries, it aims to provide good deals on everyday items to its members.
Streams of revenue
Geographic Distribution
Core Products
Business Type
Business to Consumer
Competitive Advantages
Key Business Risks
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$660.86
Current Market Price: $915.86
IV/P Ratio: 0.72x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
-39.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for COST
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (53.39)
P/B ratio ≤ 1.5 (15.91)
Current ratio ≥ 2.0 (1.00x)
Long-term debt < Net current assets (-22.39x)
Margin of safety (-39.0%)
COST does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
31.95%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-30)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
13.29%
Higher values indicate better efficiency in production
TTM (as of 2025-04-30)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
2.89%
Higher values indicate better overall profitability
TTM (as of 2025-04-30)
A return on equity (ROE) of 33.45% shows that the company is effective at generating profit from its equity, indicating strong management performance.
The gross profit margin of 12.67% and operating profit margin of 3.67% are relatively low, which could indicate that the company is operating with tight margins, potentially affecting long-term profitability.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
0.09x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q2 2025
Current Ratio
Current assets divided by current liabilities
1.00x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q2 2025
A debt to equity ratio of 0.33 suggests that the company has a manageable level of debt compared to its equity, which indicates a lower financial risk.
An interest coverage ratio of 72.50 indicates that the company generates enough earnings to easily cover its interest obligations, suggesting robust financial health.
With a current ratio of 0.98 and a quick ratio of 0.43, the company may face challenges in meeting short-term obligations, indicating potential liquidity issues.
Meeting Expectations
Higher values indicate better execution and credibility
Recent Results
EPS
Costco reported a 7.6% increase in paid household members, reaching 77.4 million, indicating a robust and growing membership base which is essential for their business model.
E-commerce sales grew by 13%, with traffic and average order value also increasing year-over-year, demonstrating successful digital strategies and member engagement.
Costco's operational execution is highlighted by record sales on opening days and strong performance in various departments, showcasing their ability to attract and serve customers effectively.
The renewal rate in the US and Canada slightly decreased to 92.8%, which may indicate challenges in retaining some members, particularly those acquired through digital channels.
Costco plans to open 29 new warehouses in fiscal year 2025, with a significant number in international markets, indicating strong growth potential and market expansion.
The introduction of new product categories and enhancements in the Kirkland Signature brand show Costco’s commitment to innovation and quality, which can attract more affluent customers.
Costco is investing in retail media and enhancing its digital presence, which is expected to drive incremental growth and improve member engagement.
The international performance showed a deceleration compared to previous quarters, which may indicate market-specific challenges that need to be addressed.
