COSTCOST
US • CONSUMER DEFENSIVE
$935.47
P/E
47.05
PEG
1.03
FCF Yield
2.0%
Rev Growth YoY
+21.5% YoY
Gross Margin
12.9%
Health Score
8/10
D/E Ratio
0.25
Confidence
MEDIUM
Business Snapshot
Costco Wholesale Corporation operates a membership-only warehouse club model, generating revenue primarily from membership fees and the sale of a wide range of merchandise including groceries, electronics, and household goods. The company operates in the discount retail market, holding a dominant position as one of the world's largest retailers with a fiercely loyal customer base driven by its low-price, high-volume strategy. As a large-cap company with a market capitalisation of $428.51B and trailing twelve-month (TTM) revenue of $293.59B, Costco exhibits substantial financial scale. Its defining characteristic is the recurring, high-margin membership fee revenue stream, which provides a predictable earnings base and allows it to operate on exceptionally thin merchandise margins.
Financial Health
Costco's financial health is robust, supported by a conservative balance sheet and strong cash generation. The company operates with a very lean gross margin of 12.9%, a hallmark of its warehouse model, which is offset by a moderate net margin of 3.0%...
Risk Assessment
- VALUATION — P/E of 47.05x trades at a significant premium to the sector average of 22x, making the stock vulnerable to multiple compression if growth disappoints.
- 52-WEEK POSITION — The current price of $935.47 sits below the midpoint of the 52-week range ($969.10), and is 14.7% below the 52-week high of $1,096.50, suggesting the stock is in a corrective phase.
- TECHNICALS — RSI, MACD, and moving average data unavailable for this period; momentum cannot be independently confirmed.
- EARNINGS QUALITY — Only 1 out of the last 4 quarters beat analyst estimates, a low hit rate that may indicate weaker earnings visibility or guidance credibility....
Costco's financial health is robust, supported by a conservative balance sheet and strong cash generation. The company operates with a very lean gross margin of 12.9%, a hallmark of its warehouse model, which is offset by a moderate net margin of 3.0%. The balance sheet is a standout strength, with a debt-to-equity ratio of just 0.25x and a current ratio of 1.03x, indicating a low reliance on debt and adequate short-term liquidity. Free cash flow is significant at $8.74B, providing a free cash flow (FCF) yield of 2.0%, which speaks to the company's underlying cash-generating power. Overall, this financial profile supports Costco’s ability to reinvest in its business, pay consistent dividends, and weather economic downturns with limited financial risk.
- VALUATION — P/E of 47.05x trades at a significant premium to the sector average of 22x, making the stock vulnerable to multiple compression if growth disappoints. - 52-WEEK POSITION — The current price of $935.47 sits below the midpoint of the 52-week range ($969.10), and is 14.7% below the 52-week high of $1,096.50, suggesting the stock is in a corrective phase. - TECHNICALS — RSI, MACD, and moving average data unavailable for this period; momentum cannot be independently confirmed. - EARNINGS QUALITY — Only 1 out of the last 4 quarters beat analyst estimates, a low hit rate that may indicate weaker earnings visibility or guidance credibility.
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