Intrinsic value of Costco Wholesale - COST

Previous Close

$218.69

  Intrinsic Value

$126.18

stock screener

  Rating & Target

sell

-42%

Previous close

$218.69

 
Intrinsic value

$126.18

 
Up/down potential

-42%

 
Rating

sell

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 2017), $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 95.8

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046
   2047

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  8.70
  8.33
  8.00
  7.70
  7.43
  7.18
  6.97
  6.77
  6.59
  6.43
  6.29
  6.16
  6.04
  5.94
  5.85
  5.76
  5.69
  5.62
  5.56
  5.50
  5.45
  5.40
  5.36
  5.33
  5.30
  5.27
  5.24
  5.22
  5.19
  5.17
Revenue, $m
  140,250
  151,933
  164,083
  176,713
  189,839
  203,478
  217,653
  232,388
  247,708
  263,644
  280,228
  297,493
  315,476
  334,217
  353,757
  374,140
  395,412
  417,623
  440,823
  465,067
  490,413
  516,919
  544,648
  573,667
  604,043
  635,850
  669,162
  704,060
  740,627
  778,949
Variable operating expenses, $m
  134,360
  145,552
  157,192
  169,291
  181,865
  194,932
  208,512
  222,627
  237,304
  252,571
  268,458
  284,998
  302,226
  320,180
  338,899
  358,426
  378,805
  400,082
  422,308
  445,535
  469,815
  495,208
  521,773
  549,573
  578,673
  609,144
  641,058
  674,490
  709,520
  746,233
Fixed operating expenses, $m
  1,433
  1,464
  1,497
  1,530
  1,563
  1,598
  1,633
  1,669
  1,705
  1,743
  1,781
  1,820
  1,860
  1,901
  1,943
  1,986
  2,030
  2,074
  2,120
  2,167
  2,214
  2,263
  2,313
  2,364
  2,416
  2,469
  2,523
  2,579
  2,635
  2,693
Total operating expenses, $m
  135,793
  147,016
  158,689
  170,821
  183,428
  196,530
  210,145
  224,296
  239,009
  254,314
  270,239
  286,818
  304,086
  322,081
  340,842
  360,412
  380,835
  402,156
  424,428
  447,702
  472,029
  497,471
  524,086
  551,937
  581,089
  611,613
  643,581
  677,069
  712,155
  748,926
Operating income, $m
  4,458
  4,917
  5,395
  5,892
  6,410
  6,949
  7,509
  8,092
  8,698
  9,330
  9,988
  10,674
  11,390
  12,136
  12,915
  13,728
  14,578
  15,466
  16,395
  17,366
  18,383
  19,448
  20,563
  21,730
  22,954
  24,237
  25,582
  26,992
  28,471
  30,023
EBITDA, $m
  6,365
  6,983
  7,626
  8,296
  8,992
  9,716
  10,469
  11,252
  12,067
  12,916
  13,799
  14,720
  15,680
  16,681
  17,726
  18,816
  19,955
  21,146
  22,390
  23,691
  25,053
  26,478
  27,970
  29,532
  31,169
  32,885
  34,682
  36,567
  38,544
  40,616
Interest expense (income), $m
  131
  355
  474
  599
  729
  864
  1,004
  1,150
  1,302
  1,459
  1,623
  1,794
  1,971
  2,155
  2,348
  2,548
  2,757
  2,975
  3,203
  3,440
  3,688
  3,947
  4,218
  4,502
  4,798
  5,109
  5,434
  5,774
  6,130
  6,503
  6,894
Earnings before tax, $m
  4,103
  4,443
  4,796
  5,164
  5,546
  5,944
  6,359
  6,790
  7,239
  7,707
  8,195
  8,704
  9,234
  9,788
  10,366
  10,971
  11,603
  12,263
  12,955
  13,678
  14,436
  15,229
  16,061
  16,932
  17,846
  18,803
  19,808
  20,862
  21,968
  23,128
Tax expense, $m
  1,108
  1,200
  1,295
  1,394
  1,497
  1,605
  1,717
  1,833
  1,955
  2,081
  2,213
  2,350
  2,493
  2,643
  2,799
  2,962
  3,133
  3,311
  3,498
  3,693
  3,898
  4,112
  4,336
  4,572
  4,818
  5,077
  5,348
  5,633
  5,931
  6,245
Net income, $m
  2,995
  3,243
  3,501
  3,769
  4,049
  4,339
  4,642
  4,957
  5,285
  5,626
  5,982
  6,354
  6,741
  7,145
  7,568
  8,009
  8,470
  8,952
  9,457
  9,985
  10,538
  11,117
  11,724
  12,360
  13,027
  13,726
  14,460
  15,229
  16,037
  16,884

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
  39,507
  42,798
  46,221
  49,778
  53,476
  57,318
  61,311
  65,461
  69,777
  74,266
  78,937
  83,801
  88,867
  94,146
  99,650
  105,392
  111,384
  117,640
  124,175
  131,005
  138,144
  145,611
  153,422
  161,596
  170,153
  179,113
  188,496
  198,327
  208,627
  219,422
Adjusted assets (=assets-cash), $m
  39,507
  42,798
  46,221
  49,778
  53,476
  57,318
  61,311
  65,461
  69,777
  74,266
  78,937
  83,801
  88,867
  94,146
  99,650
  105,392
  111,384
  117,640
  124,175
  131,005
  138,144
  145,611
  153,422
  161,596
  170,153
  179,113
  188,496
  198,327
  208,627
  219,422
Revenue / Adjusted assets
  3.550
  3.550
  3.550
  3.550
  3.550
  3.550
  3.550
  3.550
  3.550
  3.550
  3.550
  3.550
  3.550
  3.550
  3.550
  3.550
  3.550
  3.550
  3.550
  3.550
  3.550
  3.550
  3.550
  3.550
  3.550
  3.550
  3.550
  3.550
  3.550
  3.550
Average production assets, $m
  19,074
  20,663
  22,315
  24,033
  25,818
  27,673
  29,601
  31,605
  33,688
  35,856
  38,111
  40,459
  42,905
  45,454
  48,111
  50,883
  53,776
  56,797
  59,952
  63,249
  66,696
  70,301
  74,072
  78,019
  82,150
  86,476
  91,006
  95,752
  100,725
  105,937
Working capital, $m
  281
  304
  328
  353
  380
  407
  435
  465
  495
  527
  560
  595
  631
  668
  708
  748
  791
  835
  882
  930
  981
  1,034
  1,089
  1,147
  1,208
  1,272
  1,338
  1,408
  1,481
  1,558
Total debt, $m
  8,777
  11,091
  13,497
  15,998
  18,597
  21,298
  24,105
  27,023
  30,057
  33,213
  36,497
  39,916
  43,477
  47,188
  51,058
  55,094
  59,307
  63,705
  68,299
  73,100
  78,120
  83,369
  88,860
  94,606
  100,622
  106,920
  113,517
  120,428
  127,669
  135,258
Total liabilities, $m
  27,773
  30,087
  32,493
  34,994
  37,593
  40,294
  43,101
  46,019
  49,053
  52,209
  55,493
  58,912
  62,473
  66,184
  70,054
  74,090
  78,303
  82,701
  87,295
  92,096
  97,116
  102,365
  107,856
  113,602
  119,618
  125,916
  132,513
  139,424
  146,665
  154,254
Total equity, $m
  11,734
  12,711
  13,728
  14,784
  15,882
  17,023
  18,209
  19,442
  20,724
  22,057
  23,444
  24,889
  26,393
  27,961
  29,596
  31,301
  33,081
  34,939
  36,880
  38,908
  41,029
  43,246
  45,566
  47,994
  50,535
  53,196
  55,983
  58,903
  61,962
  65,168
Total liabilities and equity, $m
  39,507
  42,798
  46,221
  49,778
  53,475
  57,317
  61,310
  65,461
  69,777
  74,266
  78,937
  83,801
  88,866
  94,145
  99,650
  105,391
  111,384
  117,640
  124,175
  131,004
  138,145
  145,611
  153,422
  161,596
  170,153
  179,112
  188,496
  198,327
  208,627
  219,422
Debt-to-equity ratio
  0.750
  0.870
  0.980
  1.080
  1.170
  1.250
  1.320
  1.390
  1.450
  1.510
  1.560
  1.600
  1.650
  1.690
  1.730
  1.760
  1.790
  1.820
  1.850
  1.880
  1.900
  1.930
  1.950
  1.970
  1.990
  2.010
  2.030
  2.040
  2.060
  2.080
Adjusted equity ratio
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297
  0.297

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  2,995
  3,243
  3,501
  3,769
  4,049
  4,339
  4,642
  4,957
  5,285
  5,626
  5,982
  6,354
  6,741
  7,145
  7,568
  8,009
  8,470
  8,952
  9,457
  9,985
  10,538
  11,117
  11,724
  12,360
  13,027
  13,726
  14,460
  15,229
  16,037
  16,884
Depreciation, amort., depletion, $m
  1,907
  2,066
  2,232
  2,403
  2,582
  2,767
  2,960
  3,160
  3,369
  3,586
  3,811
  4,046
  4,290
  4,545
  4,811
  5,088
  5,378
  5,680
  5,995
  6,325
  6,670
  7,030
  7,407
  7,802
  8,215
  8,648
  9,101
  9,575
  10,073
  10,594
Funds from operations, $m
  4,902
  5,310
  5,733
  6,173
  6,631
  7,107
  7,602
  8,117
  8,653
  9,212
  9,793
  10,399
  11,031
  11,691
  12,379
  13,097
  13,848
  14,632
  15,452
  16,310
  17,208
  18,147
  19,131
  20,162
  21,242
  22,374
  23,561
  24,805
  26,109
  27,477
Change in working capital, $m
  22
  23
  24
  25
  26
  27
  28
  29
  31
  32
  33
  35
  36
  37
  39
  41
  43
  44
  46
  48
  51
  53
  55
  58
  61
  64
  67
  70
  73
  77
Cash from operations, $m
  4,880
  5,286
  5,708
  6,147
  6,604
  7,079
  7,574
  8,088
  8,623
  9,180
  9,760
  10,365
  10,995
  11,653
  12,340
  13,056
  13,805
  14,587
  15,406
  16,261
  17,157
  18,094
  19,076
  20,104
  21,181
  22,310
  23,494
  24,735
  26,036
  27,401
Maintenance CAPEX, $m
  -1,760
  -1,907
  -2,066
  -2,232
  -2,403
  -2,582
  -2,767
  -2,960
  -3,160
  -3,369
  -3,586
  -3,811
  -4,046
  -4,290
  -4,545
  -4,811
  -5,088
  -5,378
  -5,680
  -5,995
  -6,325
  -6,670
  -7,030
  -7,407
  -7,802
  -8,215
  -8,648
  -9,101
  -9,575
  -10,073
New CAPEX, $m
  -1,472
  -1,589
  -1,652
  -1,718
  -1,785
  -1,855
  -1,928
  -2,004
  -2,084
  -2,167
  -2,255
  -2,348
  -2,446
  -2,549
  -2,657
  -2,772
  -2,893
  -3,021
  -3,155
  -3,297
  -3,447
  -3,605
  -3,771
  -3,947
  -4,131
  -4,326
  -4,531
  -4,746
  -4,973
  -5,212
Cash from investing activities, $m
  -3,232
  -3,496
  -3,718
  -3,950
  -4,188
  -4,437
  -4,695
  -4,964
  -5,244
  -5,536
  -5,841
  -6,159
  -6,492
  -6,839
  -7,202
  -7,583
  -7,981
  -8,399
  -8,835
  -9,292
  -9,772
  -10,275
  -10,801
  -11,354
  -11,933
  -12,541
  -13,179
  -13,847
  -14,548
  -15,285
Free cash flow, $m
  1,648
  1,790
  1,990
  2,198
  2,416
  2,643
  2,878
  3,124
  3,379
  3,644
  3,919
  4,206
  4,504
  4,814
  5,137
  5,473
  5,824
  6,189
  6,571
  6,969
  7,385
  7,820
  8,275
  8,750
  9,248
  9,770
  10,316
  10,888
  11,488
  12,117
Issuance/(repayment) of debt, $m
  2,204
  2,314
  2,406
  2,501
  2,599
  2,701
  2,807
  2,918
  3,034
  3,156
  3,284
  3,419
  3,561
  3,711
  3,869
  4,036
  4,212
  4,398
  4,594
  4,801
  5,019
  5,249
  5,491
  5,746
  6,015
  6,299
  6,597
  6,911
  7,241
  7,589
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  
  2,204
  2,314
  2,406
  2,501
  2,599
  2,701
  2,807
  2,918
  3,034
  3,156
  3,284
  3,419
  3,561
  3,711
  3,869
  4,036
  4,212
  4,398
  4,594
  4,801
  5,019
  5,249
  5,491
  5,746
  6,015
  6,299
  6,597
  6,911
  7,241
  7,589
Total cash flow (excl. dividends), $m
  3,852
  4,103
  4,396
  4,699
  5,015
  5,344
  5,685
  6,042
  6,413
  6,800
  7,203
  7,625
  8,065
  8,525
  9,006
  9,509
  10,036
  10,588
  11,165
  11,770
  12,404
  13,069
  13,766
  14,497
  15,264
  16,068
  16,913
  17,799
  18,729
  19,705
Retained Cash Flow (-), $m
  -956
  -977
  -1,016
  -1,057
  -1,098
  -1,141
  -1,186
  -1,233
  -1,282
  -1,333
  -1,387
  -1,444
  -1,505
  -1,568
  -1,635
  -1,705
  -1,780
  -1,858
  -1,941
  -2,028
  -2,120
  -2,218
  -2,320
  -2,428
  -2,541
  -2,661
  -2,787
  -2,920
  -3,059
  -3,206
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
  516
  561
  608
  656
  707
  759
  814
  871
  930
  991
  1,055
  1,121
  1,190
  1,262
  1,337
  1,415
  1,497
  1,582
  1,670
  1,763
  1,860
  1,962
  2,068
  2,179
  2,295
  2,416
  2,543
  2,677
  2,816
  2,963
Cash available for distribution, $m
  2,897
  3,126
  3,379
  3,643
  3,917
  4,202
  4,500
  4,809
  5,131
  5,466
  5,816
  6,180
  6,560
  6,957
  7,371
  7,804
  8,256
  8,729
  9,224
  9,742
  10,284
  10,851
  11,446
  12,069
  12,722
  13,407
  14,126
  14,879
  15,670
  16,499
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
  2,777
  2,862
  2,941
  2,999
  3,036
  3,050
  3,040
  3,006
  2,947
  2,866
  2,762
  2,637
  2,494
  2,336
  2,164
  1,983
  1,796
  1,608
  1,420
  1,238
  1,064
  900
  750
  615
  495
  391
  303
  230
  171
  124
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 (COST)

Valuation Ratios
P/E Ratio 35.7
Price to Sales 0.7
Price to Book 8.9
Price to Tangible Book
Price to Cash Flow 14.2
Price to Free Cash Flow 22.6
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 $129025 million for the last fiscal year's total revenue generated by Costco Wholesale. The default revenue input number comes from 2017 income statement of Costco Wholesale. 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 8.7% 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, 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.
    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 95.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $1402 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.

Corporate tax rate of 27% is the nominal tax rate for Costco Wholesale. 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 0.4%.

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 13.6%.

Life of production assets of 10 years is the average useful life of capital assets used in Costco Wholesale 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 0.2%. 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 - $10778 million for Costco Wholesale - 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 438 million for Costco Wholesale 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 at the current share price and the inputted number of shares is $95.8 billion.

RELATED COMPANIES Price Int.Val. Rating
PSMT PriceSmart 80.40 33.56  str.sell
WMT Walmart 88.06 68.29  sell
TGT Target 77.76 81.40  hold
BIG Big Lots 43.37 43.37  hold
FIVE Five Below 102.94 98.79  buy
EBAY eBay 34.20 36.69  hold

COMPANY NEWS

▶ 12 Things Retirees Should Buy at Costco   [Jul-20-18 02:10PM  Kiplinger]
▶ Costco/Wheels Up   [Jul-19-18 05:20PM  Yahoo Finance Video]
▶ Costco, Wheels Up team up with deal   [05:01PM  Yahoo Finance Video]
▶ Walmart Cant Hold a Candle to Amazon   [Jul-18-18 11:58AM  InvestorPlace]
▶ 3 Top Retail Stocks to Buy in July   [Jul-17-18 08:50AM  Motley Fool]
▶ Better Buy: Costco Wholesale Corporation vs. Target   [Jul-14-18 03:00PM  Motley Fool]
▶ Amazon captures nearly half of all e-commerce sales, report says   [Jul-13-18 02:46PM  American City Business Journals]
▶ Company News For Jul 13, 2018   [09:47AM  Zacks]
▶ Costco changes up food court menu   [Jul-12-18 04:58PM  Yahoo Finance Video]
▶ Costco Sales: Another Month, Another Win   [10:37AM  Barrons.com]
▶ Costco Wholesale Corporation Reports June Sales Results   [Jul-11-18 04:15PM  GlobeNewswire]
▶ Sam's Club opens first e-commerce fulfillment center (Photos)   [Jul-10-18 01:26PM  American City Business Journals]
▶ The Sell-Off In PriceSmart Stock Makes Sense   [Jul-09-18 06:00AM  InvestorPlace]
▶ My Dare-to-Be-Dull Investing Strategy Pays Off   [Jul-06-18 09:17AM  Kiplinger]
▶ Best and Worst Deals at Costco This Christmas   [Jul-03-18 03:00PM  GoBankingRates]
▶ Proposed Costco in Loomis raises concerns about traffic   [09:34AM  American City Business Journals]
▶ PriceSmart Earnings: 3 Things to Watch   [Jul-01-18 03:10PM  Motley Fool]
▶ Toys R Us closes up shop while BJ's IPO is hit   [Jun-29-18 01:22PM  Yahoo Finance Video]
▶ BJ's Wholesale Club shares soar on 1st trading day   [Jun-28-18 04:33PM  Associated Press]
▶ 3 Stocks to Hold for the Next 20 Years   [Jun-27-18 09:21AM  Motley Fool]
▶ 4 Things Costco Management Wants Investors to Know   [Jun-24-18 11:31AM  Motley Fool]
▶ 40 Pretty Easy Ways to Spend Less Money   [07:27AM  Motley Fool]
▶ Public company execs to know: Costco merchandising exec Claudine Adamo   [05:00AM  American City Business Journals]
▶ Why Costco Is Still Dominating the Retail Industry   [Jun-20-18 08:00PM  GoBankingRates]
▶ 16 Secrets to Shopping at Costco   [04:33PM  Kiplinger]
▶ BJs Wholesale Club IPO: 14 Things We Know So Far   [Jun-18-18 01:48PM  InvestorPlace]
▶ [$$] Sustainable Investing With Teeth   [08:15AM  Barrons.com]
▶ Costco: It Just Keeps Getting Better   [10:14AM  Barrons.com]
▶ Staples Sector Shows Signs of Potential Rebound   [Jun-14-18 11:43AM  ETF Trends]
▶ Costco's Growth Is Accelerating   [11:13AM  Motley Fool]
▶ 3 Top Retail Stocks to Buy in June   [09:49AM  Motley Fool]
▶ Costco Continues to Deliver Impressive Sales Growth   [Jun-12-18 03:10PM  Motley Fool]
▶ No, Blue Apron Stock Is Not a Value Play   [11:38AM  Motley Fool]
▶ Could Blue Apron Holdings Inc Stock Finally Be a Buy?   [Jun-11-18 05:53PM  InvestorPlace]
▶ Why Costco (COST) Stock Hit A New High Thursday   [Jun-07-18 07:32PM  Zacks]
Follow us on:   twitter   twitter   twitter   twitter

ASSET ALLOCATION

About X-FIN       Site news       Privacy policy       Terms of use       FAQ

Copyright © X-FIN.com 2005-2018. All rigths reserved.