Company Introduction
Headquarters Location: Issaquah, Washington, USA
Core Business Summary: Costco Wholesale Corporation operates a multinational chain of membership-based warehouse clubs, offering a wide selection of products, including groceries, electronics, and home goods.
Overview
$914.80
50.24
18.21
$405.47B
Company Overview
Industry Sector: Retail
Industry Trends
Industry Growth: The global retail market is expected to grow at a CAGR of 5.3% from 2022 to 2027
Key Demand Drivers: Increasing demand for online shopping, convenience, and value-driven retail experiences
Major Competitors: Walmart, Target, Amazon, and BJ's Wholesale Club
Financials
| 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | |
|---|---|---|---|---|---|---|---|---|---|
| Revenue | $118.72B | $129.03B | $141.58B | $152.70B | $166.76B | $195.93B | $226.95B | $242.29B | $254.45B |
| YoY % | +8.7% | +9.7% | +7.9% | +9.2% | +17.5% | +15.8% | +6.8% | +5.0% | |
| EBITDA | $5.01B | $5.54B | $6.04B | $6.41B | $7.37B | $8.92B | $10.28B | $11.14B | $12.15B |
| YoY % | +10.6% | +9.0% | +6.1% | +15.0% | +21.0% | +15.2% | +8.4% | +9.1% | |
| FCF | $643.00M | $4.22B | $2.81B | $3.36B | $6.05B | $5.37B | $3.50B | $6.75B | $6.63B |
| YoY % | -99.3% | -33.4% | +19.6% | +80.1% | -11.2% | -34.8% | +92.9% | -1.8% | |
| EPS | 4.10 | 4.65 | 7.12 | 8.24 | 6.66 | 8.95 | 10.35 | 10.89 | 16.36 |
| YoY % | +13.4% | +53.1% | +15.7% | -19.2% | +34.4% | +15.6% | +5.2% | +50.2% |
Growth Drivers
Historical Drivers: Expansion of warehouse clubs, increasing membership base, and growing e-commerce sales
Future Drivers: Continued investment in digital transformation, expansion into new markets, and strategic partnerships (e.g., with Instacart for same-day delivery)
Examples: Costco's e-commerce sales grew by 12.6% in 2022, and the company plans to open 25 new warehouse clubs in 2023
Market Position
Competitive Position: Leader in the warehouse club segment
Estimated Market Share: Around 5% of the global retail market
Technological Moat: Strong e-commerce platform, mobile app, and data analytics capabilities
Strengths
- Strong financials
- Loyal customer base
- Efficient supply chain
- Diversified product offerings
Weaknesses
- Cyclical exposure
- Regulatory risks
- Competition from online retailers
- Dependence on international trade
Valuations
Valuations for COST
| Formula | Bull | Base | Bear | Margin of Safety |
|---|---|---|---|---|
| Ben Graham | $502.46 | $502.46 | $185.12 | -82.1% |
| Peter Lynch | – | $412.11 | – | -122.0% |
Rule of thumb (Lynch):
PEG ≈ 1 → Fairly valued
PEG < 1 → Undervalued (growth cheap relative to earnings)
PEG > 1.5 → Overvalued
Outlook
Opportunities: Continued growth in e-commerce, expansion into new markets, and increasing demand for value-driven retail experiences
Risks: Cyclical exposure, regulatory risks, and competition from online retailers
3-5 Year Horizon: Costco is expected to continue its growth trajectory, driven by its strong financials, loyal customer base, and efficient supply chain. However, the company must navigate the risks associated with cyclical exposure, regulatory changes, and competition from online retailers.
Stock Price Performance
| 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Price | 158.25 | 166.70 | 182.75 | 244.19 | 286.78 | 354.94 | 575.57 | 497.03 | 721.24 | 954.40 |
| YoY % | +5.3% | +9.6% | +33.6% | +17.4% | +23.8% | +62.2% | -13.6% | +45.1% | +32.3% |
Stock 3 Year Rolling CAGR
| Metric | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | Average |
|---|---|---|---|---|---|---|---|---|
| Revenue | 6.04% | 5.78% | 5.61% | 8.66% | 10.82% | 7.34% | 3.89% | 6.88% |
| EBITDA | 6.44% | 4.95% | 6.85% | 11.65% | 11.73% | 7.68% | 5.73% | 7.86% |
| FCF | 63.40% | -7.36% | 29.21% | 16.94% | -16.67% | 7.90% | 23.71% | 16.73% |
| EPS | 20.20% | 21.01% | -2.20% | 2.79% | 15.83% | 6.76% | 16.49% | 11.55% |
| Price | 4.92% | 13.57% | 16.21% | 13.28% | 26.14% | 11.88% | 7.81% | 13.40% |
