Intrinsic value of Costco Wholesale Corporation - COST

Previous Close

$237.56

  Intrinsic Value

$201.50

stock screener

  Rating & Target

hold

-15%

Previous close

$237.56

 
Intrinsic value

$201.50

 
Up/down potential

-15%

 
Rating

hold

We calculate the intrinsic value of COST stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 104.5

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  7.30
  7.07
  6.86
  6.68
  6.51
  6.36
  6.22
  6.10
  5.99
  5.89
  5.80
  5.72
  5.65
  5.58
  5.53
  5.47
  5.43
  5.38
  5.35
  5.31
  5.28
  5.25
  5.23
  5.20
  5.18
  5.17
  5.15
  5.13
  5.12
  5.11
Revenue, $m
  151,911
  162,651
  173,814
  185,419
  197,488
  210,044
  223,114
  236,724
  250,904
  265,685
  281,100
  297,184
  313,974
  331,508
  349,828
  368,976
  388,997
  409,939
  431,851
  454,785
  478,796
  503,941
  530,279
  557,874
  586,792
  617,100
  648,872
  682,183
  717,114
  753,746
Variable operating expenses, $m
  146,906
  157,153
  167,804
  178,876
  190,391
  202,371
  214,841
  227,826
  241,355
  255,458
  268,197
  283,543
  299,562
  316,291
  333,770
  352,039
  371,141
  391,122
  412,028
  433,910
  456,819
  480,809
  505,939
  532,267
  559,857
  588,774
  619,088
  650,870
  684,197
  719,148
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  146,906
  157,153
  167,804
  178,876
  190,391
  202,371
  214,841
  227,826
  241,355
  255,458
  268,197
  283,543
  299,562
  316,291
  333,770
  352,039
  371,141
  391,122
  412,028
  433,910
  456,819
  480,809
  505,939
  532,267
  559,857
  588,774
  619,088
  650,870
  684,197
  719,148
Operating income, $m
  5,005
  5,498
  6,010
  6,543
  7,097
  7,673
  8,273
  8,898
  9,549
  10,227
  12,903
  13,641
  14,412
  15,217
  16,058
  16,936
  17,855
  18,817
  19,823
  20,875
  21,977
  23,132
  24,341
  25,607
  26,935
  28,326
  29,784
  31,313
  32,917
  34,598
EBITDA, $m
  8,515
  9,117
  9,743
  10,393
  11,070
  11,774
  12,506
  13,269
  14,064
  14,892
  15,756
  16,658
  17,599
  18,582
  19,609
  20,682
  21,804
  22,978
  24,206
  25,492
  26,838
  28,247
  29,724
  31,270
  32,891
  34,590
  36,371
  38,238
  40,196
  42,250
Interest expense (income), $m
  131
  355
  467
  582
  701
  826
  955
  1,089
  1,229
  1,375
  1,526
  1,684
  1,849
  2,021
  2,201
  2,389
  2,585
  2,790
  3,004
  3,228
  3,462
  3,708
  3,965
  4,234
  4,516
  4,811
  5,120
  5,445
  5,785
  6,141
  6,515
Earnings before tax, $m
  4,650
  5,031
  5,428
  5,842
  6,271
  6,719
  7,184
  7,669
  8,174
  8,701
  11,218
  11,792
  12,390
  13,016
  13,669
  14,352
  15,066
  15,813
  16,595
  17,413
  18,270
  19,167
  20,107
  21,092
  22,124
  23,205
  24,339
  25,529
  26,775
  28,083
Tax expense, $m
  1,255
  1,358
  1,466
  1,577
  1,693
  1,814
  1,940
  2,071
  2,207
  2,349
  3,029
  3,184
  3,345
  3,514
  3,691
  3,875
  4,068
  4,269
  4,481
  4,701
  4,933
  5,175
  5,429
  5,695
  5,973
  6,265
  6,572
  6,893
  7,229
  7,582
Net income, $m
  3,394
  3,673
  3,963
  4,264
  4,578
  4,905
  5,244
  5,598
  5,967
  6,352
  8,189
  8,608
  9,045
  9,501
  9,978
  10,477
  10,998
  11,543
  12,114
  12,711
  13,337
  13,992
  14,678
  15,397
  16,150
  16,940
  17,768
  18,636
  19,546
  20,501

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  43,816
  46,914
  50,134
  53,481
  56,962
  60,584
  64,354
  68,279
  72,369
  76,633
  81,079
  85,718
  90,561
  95,618
  100,902
  106,425
  112,200
  118,240
  124,560
  131,175
  138,101
  145,354
  152,951
  160,910
  169,251
  177,992
  187,157
  196,765
  206,840
  217,406
Adjusted assets (=assets-cash), $m
  43,816
  46,914
  50,134
  53,481
  56,962
  60,584
  64,354
  68,279
  72,369
  76,633
  81,079
  85,718
  90,561
  95,618
  100,902
  106,425
  112,200
  118,240
  124,560
  131,175
  138,101
  145,354
  152,951
  160,910
  169,251
  177,992
  187,157
  196,765
  206,840
  217,406
Revenue / Adjusted assets
  3.467
  3.467
  3.467
  3.467
  3.467
  3.467
  3.467
  3.467
  3.467
  3.467
  3.467
  3.467
  3.467
  3.467
  3.467
  3.467
  3.467
  3.467
  3.467
  3.467
  3.467
  3.467
  3.467
  3.467
  3.467
  3.467
  3.467
  3.467
  3.467
  3.467
Average production assets, $m
  20,356
  21,795
  23,291
  24,846
  26,463
  28,146
  29,897
  31,721
  33,621
  35,602
  37,667
  39,823
  42,072
  44,422
  46,877
  49,443
  52,126
  54,932
  57,868
  60,941
  64,159
  67,528
  71,057
  74,755
  78,630
  82,691
  86,949
  91,413
  96,093
  101,002
Working capital, $m
  -7,292
  -7,807
  -8,343
  -8,900
  -9,479
  -10,082
  -10,709
  -11,363
  -12,043
  -12,753
  -13,493
  -14,265
  -15,071
  -15,912
  -16,792
  -17,711
  -18,672
  -19,677
  -20,729
  -21,830
  -22,982
  -24,189
  -25,453
  -26,778
  -28,166
  -29,621
  -31,146
  -32,745
  -34,421
  -36,180
Total debt, $m
  8,648
  10,776
  12,988
  15,288
  17,679
  20,167
  22,757
  25,454
  28,264
  31,193
  34,247
  37,434
  40,761
  44,236
  47,866
  51,660
  55,627
  59,777
  64,119
  68,664
  73,421
  78,404
  83,623
  89,091
  94,821
  100,827
  107,123
  113,723
  120,645
  127,904
Total liabilities, $m
  30,102
  32,230
  34,442
  36,742
  39,133
  41,621
  44,211
  46,908
  49,718
  52,647
  55,701
  58,888
  62,215
  65,690
  69,320
  73,114
  77,081
  81,231
  85,573
  90,118
  94,875
  99,858
  105,077
  110,545
  116,275
  122,281
  128,577
  135,177
  142,099
  149,358
Total equity, $m
  13,714
  14,684
  15,692
  16,740
  17,829
  18,963
  20,143
  21,371
  22,652
  23,986
  25,378
  26,830
  28,345
  29,928
  31,582
  33,311
  35,119
  37,009
  38,987
  41,058
  43,226
  45,496
  47,874
  50,365
  52,975
  55,712
  58,580
  61,587
  64,741
  68,048
Total liabilities and equity, $m
  43,816
  46,914
  50,134
  53,482
  56,962
  60,584
  64,354
  68,279
  72,370
  76,633
  81,079
  85,718
  90,560
  95,618
  100,902
  106,425
  112,200
  118,240
  124,560
  131,176
  138,101
  145,354
  152,951
  160,910
  169,250
  177,993
  187,157
  196,764
  206,840
  217,406
Debt-to-equity ratio
  0.630
  0.730
  0.830
  0.910
  0.990
  1.060
  1.130
  1.190
  1.250
  1.300
  1.350
  1.400
  1.440
  1.480
  1.520
  1.550
  1.580
  1.620
  1.640
  1.670
  1.700
  1.720
  1.750
  1.770
  1.790
  1.810
  1.830
  1.850
  1.860
  1.880
Adjusted equity ratio
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313
  0.313

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  3,394
  3,673
  3,963
  4,264
  4,578
  4,905
  5,244
  5,598
  5,967
  6,352
  8,189
  8,608
  9,045
  9,501
  9,978
  10,477
  10,998
  11,543
  12,114
  12,711
  13,337
  13,992
  14,678
  15,397
  16,150
  16,940
  17,768
  18,636
  19,546
  20,501
Depreciation, amort., depletion, $m
  3,510
  3,619
  3,733
  3,850
  3,973
  4,100
  4,233
  4,371
  4,515
  4,665
  2,854
  3,017
  3,187
  3,365
  3,551
  3,746
  3,949
  4,161
  4,384
  4,617
  4,861
  5,116
  5,383
  5,663
  5,957
  6,264
  6,587
  6,925
  7,280
  7,652
Funds from operations, $m
  6,904
  7,292
  7,695
  8,115
  8,551
  9,005
  9,477
  9,970
  10,482
  11,017
  11,043
  11,625
  12,232
  12,867
  13,530
  14,222
  14,947
  15,705
  16,498
  17,328
  18,197
  19,108
  20,061
  21,060
  22,107
  23,204
  24,355
  25,561
  26,826
  28,152
Change in working capital, $m
  -496
  -516
  -536
  -557
  -579
  -603
  -627
  -653
  -681
  -709
  -740
  -772
  -806
  -842
  -879
  -919
  -961
  -1,005
  -1,052
  -1,101
  -1,153
  -1,207
  -1,264
  -1,325
  -1,388
  -1,455
  -1,525
  -1,599
  -1,677
  -1,758
Cash from operations, $m
  7,401
  7,807
  8,231
  8,672
  9,130
  9,608
  10,105
  10,623
  11,163
  11,726
  11,783
  12,397
  13,038
  13,708
  14,409
  15,142
  15,908
  16,710
  17,550
  18,429
  19,350
  20,314
  21,325
  22,385
  23,495
  24,659
  25,880
  27,160
  28,503
  29,911
Maintenance CAPEX, $m
  -1,433
  -1,542
  -1,651
  -1,764
  -1,882
  -2,005
  -2,132
  -2,265
  -2,403
  -2,547
  -2,697
  -2,854
  -3,017
  -3,187
  -3,365
  -3,551
  -3,746
  -3,949
  -4,161
  -4,384
  -4,617
  -4,861
  -5,116
  -5,383
  -5,663
  -5,957
  -6,264
  -6,587
  -6,925
  -7,280
New CAPEX, $m
  -1,435
  -1,439
  -1,496
  -1,555
  -1,617
  -1,683
  -1,751
  -1,824
  -1,900
  -1,981
  -2,066
  -2,155
  -2,250
  -2,350
  -2,455
  -2,566
  -2,683
  -2,806
  -2,936
  -3,073
  -3,217
  -3,369
  -3,529
  -3,698
  -3,875
  -4,061
  -4,257
  -4,464
  -4,681
  -4,909
Cash from investing activities, $m
  -2,868
  -2,981
  -3,147
  -3,319
  -3,499
  -3,688
  -3,883
  -4,089
  -4,303
  -4,528
  -4,763
  -5,009
  -5,267
  -5,537
  -5,820
  -6,117
  -6,429
  -6,755
  -7,097
  -7,457
  -7,834
  -8,230
  -8,645
  -9,081
  -9,538
  -10,018
  -10,521
  -11,051
  -11,606
  -12,189
Free cash flow, $m
  4,532
  4,826
  5,084
  5,352
  5,631
  5,920
  6,221
  6,534
  6,860
  7,199
  7,020
  7,388
  7,772
  8,171
  8,589
  9,024
  9,479
  9,955
  10,452
  10,972
  11,516
  12,085
  12,680
  13,304
  13,957
  14,641
  15,358
  16,109
  16,897
  17,722
Issuance/(repayment) of debt, $m
  2,071
  2,128
  2,212
  2,300
  2,392
  2,488
  2,590
  2,697
  2,810
  2,929
  3,055
  3,187
  3,327
  3,474
  3,630
  3,794
  3,967
  4,150
  4,342
  4,545
  4,758
  4,983
  5,219
  5,468
  5,730
  6,006
  6,296
  6,601
  6,922
  7,259
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  2,071
  2,128
  2,212
  2,300
  2,392
  2,488
  2,590
  2,697
  2,810
  2,929
  3,055
  3,187
  3,327
  3,474
  3,630
  3,794
  3,967
  4,150
  4,342
  4,545
  4,758
  4,983
  5,219
  5,468
  5,730
  6,006
  6,296
  6,601
  6,922
  7,259
Total cash flow (excl. dividends), $m
  6,603
  6,954
  7,296
  7,652
  8,022
  8,408
  8,811
  9,231
  9,670
  10,128
  10,075
  10,575
  11,098
  11,646
  12,219
  12,819
  13,447
  14,105
  14,794
  15,516
  16,273
  17,067
  17,899
  18,772
  19,687
  20,647
  21,654
  22,710
  23,818
  24,981
Retained Cash Flow (-), $m
  -915
  -970
  -1,008
  -1,048
  -1,090
  -1,134
  -1,180
  -1,229
  -1,280
  -1,334
  -1,392
  -1,452
  -1,516
  -1,583
  -1,654
  -1,729
  -1,808
  -1,891
  -1,978
  -2,071
  -2,168
  -2,270
  -2,378
  -2,491
  -2,611
  -2,736
  -2,868
  -3,007
  -3,154
  -3,307
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  5,687
  5,985
  6,288
  6,604
  6,933
  7,275
  7,631
  8,002
  8,389
  8,793
  8,683
  9,123
  9,583
  10,063
  10,565
  11,090
  11,639
  12,214
  12,816
  13,446
  14,106
  14,797
  15,521
  16,281
  17,076
  17,911
  18,785
  19,703
  20,665
  21,674
Discount rate, %
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
  5,453
  5,479
  5,472
  5,438
  5,374
  5,280
  5,155
  5,002
  4,819
  4,610
  4,124
  3,893
  3,644
  3,378
  3,102
  2,818
  2,533
  2,249
  1,973
  1,709
  1,459
  1,228
  1,017
  829
  664
  523
  403
  305
  226
  163
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Costco Wholesale Corporation is engaged in the operation of membership warehouses in the United States and Puerto Rico, Canada, the United Kingdom, Mexico, Japan, Australia, Spain, and through its subsidiaries in Taiwan and Korea. As of August 28, 2016, the Company operated 715 warehouses across the world. The Company's average warehouse space is approximately 144,000 square feet. The Company's warehouses on average operate on a seven-day, 70-hour week. The Company offers merchandise in various categories, which include foods (including dry foods, packaged foods and groceries); sundries (including snack foods, candy, alcoholic and nonalcoholic beverages, and cleaning supplies); hardlines (including appliances, electronics, health and beauty aids, hardware, and garden and patio); fresh foods (including meat, produce, deli and bakery); softlines (including apparel and small appliances), and other (including gas stations and pharmacy).

FINANCIAL RATIOS  of  Costco Wholesale Corporation (COST)

Valuation Ratios
P/E Ratio 38.8
Price to Sales 0.8
Price to Book 9.6
Price to Tangible Book
Price to Cash Flow 15.4
Price to Free Cash Flow 24.6
Growth Rates
Sales Growth Rate 8.7%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -5.5%
Cap. Spend. - 3 Yr. Gr. Rate 4.7%
Financial Strength
Quick Ratio 67
Current Ratio 0
LT Debt to Equity 61%
Total Debt to Equity 61.8%
Interest Coverage 32
Management Effectiveness
Return On Assets 8%
Ret/ On Assets - 3 Yr. Avg. 7.6%
Return On Total Capital 15.3%
Ret/ On T. Cap. - 3 Yr. Avg. 14.2%
Return On Equity 23.4%
Return On Equity - 3 Yr. Avg. 21.6%
Asset Turnover 3.7
Profitability Ratios
Gross Margin 13.3%
Gross Margin - 3 Yr. Avg. 13.2%
EBITDA Margin 4.3%
EBITDA Margin - 3 Yr. Avg. 4.2%
Operating Margin 3.2%
Oper. Margin - 3 Yr. Avg. 3.1%
Pre-Tax Margin 3.1%
Pre-Tax Margin - 3 Yr. Avg. 3.1%
Net Profit Margin 2.1%
Net Profit Margin - 3 Yr. Avg. 2%
Effective Tax Rate 32.8%
Eff/ Tax Rate - 3 Yr. Avg. 33.4%
Payout Ratio 145.7%

COST stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the COST stock intrinsic value calculation we used $141576 million for the last fiscal year's total revenue generated by Costco Wholesale Corporation. The default revenue input number comes from 0001 income statement of Costco Wholesale Corporation. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our COST stock valuation model: a) initial revenue growth rate of 7.3% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for COST is calculated based on our internal credit rating of Costco Wholesale Corporation, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Costco Wholesale Corporation.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of COST stock the variable cost ratio is equal to 96.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for COST stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Costco Wholesale Corporation.

Corporate tax rate of 27% is the nominal tax rate for Costco Wholesale Corporation. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the COST stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for COST are equal to 13.4%.

Life of production assets of 13.2 years is the average useful life of capital assets used in Costco Wholesale Corporation operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for COST is equal to -4.8%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $12799 million for Costco Wholesale Corporation - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 439.983 million for Costco Wholesale Corporation is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Costco Wholesale Corporation at the current share price and the inputted number of shares is $104.5 billion.

RELATED COMPANIES Price Int.Val. Rating
PSMT PriceSmart, In 58.93 35.37  sell
BIG Big Lots, Inc. 35.05 229.21  str.buy
FIVE Five Below, In 116.97 75.01  sell
EBAY eBay Inc. 36.65 46.89  buy

CONTACT US      

About X-FIN       Privacy policy       Terms of use      

Copyright © X-FIN.com 2005-2019. All rigths reserved.