However, the stock looks overly expensive. The P/E is close to its highest level of the last 10 years and well off its 10-year average of 36. Costco is also a much larger business today than it was 10 years ago. With $260 billion in annual sales, it will be hard for Costco to grow quickly in the years ahead.
There's nothing wrong with Costco's business. The leading warehouse club chain continues to deliver value for its 77 million members worldwide, while putting up consistently strong financial results and steadily expanding its footprint both in the U.S. and overseas.
The market has high expectations of Costco, because it's delivered so reliably for such a long time, and because it still has so much more potential. The risk is that at this valuation, the stock could fall as soon as there's any imperfection.
Looking at cash flow, Costco is expected to report cash flow growth of 9.3% this year; COST has generated cash flow growth of 12.9% over the past three to five years. COST should be on investors' short lists because of its impressive growth fundamentals, a good Zacks Rank, and strong Growth and VGM Style Scores.
There's a chance that Costco will split its stock before it gets to $1,000. So while the value will theoretically be there, in actual price per share, it wouldn't. On a split-adjusted basis, one Costco share was worth $1.67 at the initial public offering price.
Ten Year Stock Price Total Return for Costco Wholesale is calculated as follows: Last Close Price [ 936.94 ] / Adj Prior Close Price [ 115.47 ] (-) 1 (=) Total Return [ 711.4% ] Prior price dividend adjustment factor is 0.81.
Largest shareholders include Vanguard Group Inc, BlackRock, Inc., State Street Corp, VTSMX - Vanguard Total Stock Market Index Fund Investor Shares, VFINX - Vanguard 500 Index Fund Investor Shares, Geode Capital Management, Llc, Morgan Stanley, Fmr Llc, Invesco Qqq Trust, Series 1, and International Assets Investment ...
The growth gap narrows
Costco's revenues rose 46% in the three-year period from fiscal year 2019 to 2022. Walmart's top-line growth stopped at 14.5% over that time span. But things have changed, and the two companies have shown very similar sales growth in the last two years.
As mentioned before, despite its recession-resistant business, Costco did not escape the effects of the financial crisis. In fiscal 2009 (ended Aug. 30, 2009), its net sales of $70 billion fell by almost 2% from year-ago levels.
Costco's supply chain has a bit of a geography problem—it tends to stretch into regions where labor laws are, well, pretty chill. This raises all kinds of red flags when it comes to workers' rights and safety.
Costco Wholesale's total debt for fiscal years ending August 2020 to 2024 averaged 3,317 billion. Costco Wholesale's operated at median total debt of 1,501.8 billion from fiscal years ending August 2020 to 2024. Looking back at the last 5 years, Costco Wholesale's total debt peaked in September 2024 at 9,463.5 billion.
The golf club company TaylorMade filed a lawsuit against Costco alleging Costco's Kirkland Signature irons infringe on TaylorMade patents, particularly those related to the P790 irons. As of May 2024, the Kirkland Signature set retails for $499.99, if you can find it in stock.
The only other time it was pricier was in 2021, right before it plunged in 2022. In other words, Costco's P/E ratio is over 50 again and an overvalued market could be the culprit, just like in 2000.
Costco has 14.73% upside potential, based on the analysts' average price target. Is COST a Buy, Sell or Hold? Costco has a consensus rating of Moderate Buy which is based on 17 buy ratings, 8 hold ratings and 0 sell ratings.
Many analysts rate the stock a “Buy” — a sign that they expect it to keep pushing higher. This usually means it's a good time to buy the stock. One of Costco's main advantages is it's the biggest dog in what is essentially a three-dog race — with very high barriers to entry.
Costco Wholesale is most highly rated for Compensation and benefits and Walmart is most highly rated for Compensation and benefits. Learn more, read reviews and see open jobs.
The retailer serves around 240 million customers globally each week. Over the past twelve months the share price is up 70.96%. Based on the DCF valuation, the stock is overvalued. The DCF value of $42.69 per share is lower than the current market price of $90.78.
United States and China
Costco is the largest member-owned warehouse chain in the United States. Founded in Seattle, Washington, in 1983, Costco has 833 stores worldwide.
Costco's CEO appears to have had his best financial year yet. Since becoming CEO of the wholesale club in January, Ron Vachris received a compensation package worth more than $12.2 million in the 2024 fiscal year, according to the company's latest proxy statement filed Wednesday with the SEC.
Does Buffett Own Costco Now? Berkshire Hathaway and Buffett no longer own a position in Costco. But its board members still own personal stakes, which we will discuss more below. What is surprising is that the company sold before the company paid $4.4 billion in a special dividend to shareholders.
An investor who bought $1,000 worth of Costco stock at the IPO in 1986 would have. The all-time high Costco stock closing price was 994.69 on December 11, 2024. The Costco 52-week high stock price is 1008.25, which is 7.6% above the current share price.
Once an item has sold out, it's automatically removed from Costco.com, or you'll see the "Out of Stock" banner added to the product page.
As of today, Costco Wholesale's WACC % is 11.05%. Costco Wholesale's ROIC % is 16.33% (calculated using TTM income statement data). Costco Wholesale generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns.