* Note: Prices are in Million (M) USD.
Description:
Costco Wholesale Corporation (doing business as Costco Wholesale and also known simply as Costco) is an American multinational corporation which operates a chain of membership-only (needing a membership to shop there) big-box retail stores. As of 2020, Costco was the fifth largest retailer in the world, and the world's largest retailer of choice and prime beef, organic foods, rotisserie chicken, and wine as of 2016.
These criteria used Company's Cash, EBITDA and Debt balance to determines its fair value:
Cash : $13,836 M
Debt : $8,180 M
EBITDA : $11,580 M
Since Cash is greater than Total Debt, 5 points assigned.
This criteria used industry in which company operates:
Sector: Consumer defensive
Industry: Discount stores
Based on industry, 3 points assigned.
This criteria used Company's Price To Earning (P/E) Ratio to determines its fair value:
Forward PE Ratio: 50.02
Since Forward PE Ratio is greater than 35, 0 point assigned.
This criteria used Company's ability to convert Sales into free cash flow to determine fair value:
Using last 20 overlapping fiscal years (max 20).Average Free Cash Flow: $2,664 M
Average Revenue: $127,490 M
Revenue Converted To Free Cash Flow (%): 2.1%
Since Free Cash Flow (FCF) to Revenue percentage is less than 15, 1 point assigned.
This criteria used company's growth potential to calculate its fair value:
Latest Revenue (2024-08-31): $254,453 M
Revenue 4 Years Ago (2020-08-31): $166,761 M
Last 5 Years Average Revenue Growth: 11%
Since Revenue Growth is between 10 - 15, 3 points assigned.
This criteria used Company's ability to buy back its own share:
Latest Share Count (2024-08-31): $445 M
Share Count 5 Years Ago (2020-08-31): $444 M
Company is not buying back its own shares, 0 points assigned.
This criteria used Company's dividend payout ratio to determine its fair value:
Next Year Earnings Per Share (EPS): $19.70
Trailing 12-Month Earnings Per Share (EPS): $18.08
Average Earnings Per Share (EPS): $18.89
Dividend Per Share (DPS): $5
Payout Ratio: 25%
Dividend Yield: 1%
Since company Payout Ratio is less than 50, 2 points assigned.
Since Dividend Yield is less than 1, 0 point assigned.
This criteria used Company's Return On Equity (ROE%) to determine its fair value:
Using last 20 valid ROE years (max 20).Average ROE: 19.3%
Since Average ROE is between 10 - 20, 3 points assigned.
This criteria used Company's current price to its 52 week low price to determines its fair value:
Current Price: $945
52-Week Low: $863
Threshold Price (15% Above 52-Week Low): $992
Since Current price is within 15% threshold, 5 points assigned.
This criteria used Company's Market Cap to determines its fair value:
Market Capitalization: $421,090 M
Since Market Cap is between 100B - 500B, 3 points assigned.
% Exposure to Total Portfolio
Based on the market cap, we recommend do not exceed 0.20% exposure of Total Portfolio.
Value-Trade has assigned 25 points to above Costco Wholesale Corp (COST) stock.
Last 16 Years Avg PE 34.07, Fair Value PE 15, Industry Based PE 20, Growth Based PE 10, RCFC Based PE 11.67, ROE Based PE 25.41, Risk-Free Anchored PE (25% MoS) 17.08. Based on these 7 values, average assigned is 19.03. Value-Trades has assined P/E value 19.03. Since an average (Current Year EPS + Next Year EPS) earning per share is $18.89.
The fair value of Costco Wholesale Corp (COST) stock should be (19.03 x $18.89) = $359.54.
