Costco Wholesale Corp

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COST : NASDAQ : Services
$166.92 -0.76 | -0.45%
Today's Range: 166.43 - 168.42
Avg. Daily Volume: 2369300.0
03/23/17 - 3:59 PM ET

Financial Analysis


COSTCO WHOLESALE CORP's gross profit margin for the second quarter of its fiscal year 2017 is essentially unchanged when compared to the same period a year ago. Even though sales increased, the net income has decreased, representing a decrease to the bottom line. COSTCO WHOLESALE CORP has very weak liquidity. Currently, the Quick Ratio is 0.40 which clearly shows a lack of ability to cover short-term cash needs. The company's liquidity decreased from the same period a year ago, despite already having very weak liquidity to begin with. This would indicate deteriorating cash flow.

During the same period, stockholders' equity ("net worth") has increased by 13.09% from the same quarter last year. The key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the near future.

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Income Statement Q2 FY17 Q2 FY16
Net Sales ($mil)29766.028170.0
EBITDA ($mil)1156.01141.0
EBIT ($mil)844.0856.0
Net Income ($mil)515.0546.0


Balance Sheet Q2 FY17 Q2 FY16
Cash & Equiv. ($mil)5965.04855.0
Total Assets ($mil)35630.032388.0
Total Debt ($mil)5072.04975.0
Equity ($mil)12440.011000.0


Profitability Q2 FY17 Q2 FY16
Gross Profit Margin13.9514.15
EBITDA Margin3.884.05
Operating Margin2.843.04
Sales Turnover0.03.62
Return on Assets0.07.12
Return on Equity0.020.99
Debt Q2 FY17 Q2 FY16
Current Ratio0.931.01
Debt/Capital0.290.31
Interest Expense31.031.0
Interest Coverage27.2327.61


Share Data Q2 FY17 Q2 FY16
Shares outstanding (mil)438.94439.26
Div / share0.450.4
EPS1.171.24
Book value / share28.3425.04
Institutional Own % n/a n/a
Avg Daily Volume2351004.02479213.0

Valuation


HOLD. COSTCO WHOLESALE CORP's P/E ratio indicates a significant premium compared to an average of 21.90 for the Food & Staples Retailing industry and a significant premium compared to the S&P 500 average of 26.73. For additional comparison, its price-to-book ratio of 5.89 indicates a significant premium versus the S&P 500 average of 2.98 and a significant premium versus the industry average of 3.70. The current price-to-sales ratio is well below the S&P 500 average, but above the industry average. Upon assessment of these and other key valuation criteria, COSTCO WHOLESALE CORP proves to trade at a premium to investment alternatives within the industry.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
COST 39.97 Peers 21.90   COST 14.70 Peers 9.68

Premium. A higher P/E ratio than its peers can signify a more expensive stock or higher growth expectations.

COST is trading at a significant premium to its peers.

 

Premium. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.

COST is trading at a significant premium to its peers.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
COST 25.96 Peers 18.68   COST 6.66 Peers 2.28

Premium. A higher price-to-projected earnings ratio than its peers can signify a more expensive stock or higher future growth expectations.

COST is trading at a significant premium to its peers.

 

Premium. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.

COST trades at a significant premium to its peers.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
COST 5.89 Peers 3.70   COST -20.08 Peers -0.99

Premium. A higher price-to-book ratio makes a stock less attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

COST is trading at a significant premium to its peers.

 

Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

However, COST is expected to significantly trail its peers on the basis of its earnings growth rate.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
COST 0.78 Peers 0.55   COST -19.48 Peers 1.38

Premium. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.

COST is trading at a significant premium to its industry.

 

Lower. A sales growth rate that trails the industry implies that a company is losing market share.

COST significantly trails its peers on the basis of sales growth

 

 

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