COST Investment Analysis Report & Stock Research, Costco Wholesale Corp.

Costco Wholesale Corporation (COST)

COST Stock Report

2-Year Price History

View Larger COST Chart
NASDAQ:COST
$58.70
(2/9 2:35PM)
+1.0%
Open$58.8 Mkt Cap$25.5 Billion
High$59.03 52Wk High$61.25
Low$58.2 52Wk Low$38.17
Volume1.7 Million Avg Vol 10D4.3 Million

Ockham's Rating/Recommendation Summary

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COST Revenue

For a long time, value investors have used the current share price relative to sales per share levels as an important valuation tool. We utilize a historical weighted average methodology that treats recent years more importantly in the calculation. When looking at COST through this framework, we can see that our weighted average historical high and low Price to Sales per share ratios over the last 10 years are 0.49x and 0.32x respectively.

Utilizing this range we can see that COST’s current Price to Sales per share ratio of 0.35x is somewhat below its historical weighted average by 14%. Given this level of sales per share, we suggest a neutral share price forecast. To the extent there is a further drop in the Price to Sales ratio from current levels, which would occur through some combination of increased sales per share or a decline in share price, we would only become more positive about the Price to Sales ratio outlook.

COST Cash Earnings

Cash Earnings is always one of the most important factors to review for a company and, more importantly, an investment in a stock. COST is below their historical average multiples of Cash Earnings, as calculated by our proprietary analysis. It is incredibly important to understand that for COST, the current level of Cash Earnings compared to its historical levels helps identify where COST is in relation to what the investing community was willing to pay for this level of Cash Earnings in the past. With a historical high Cash Earnings per share ratio of 18.42 and a historical low Cash Earnings per share ratio of 12.13, an investor can relate where value becomes optimal.

With a historical average Cash Earnings ratio of 15.28, the current Cash Earnings ratio of 13.95 is a positive opportunity for value in the Ockham view. Naturally, we would love to see a deeper value opportunity for COST, but to get there one of two things must occur (or both). Either the stock price must decline further to increase the long term buying opportunity, or the management at COST needs to earn more cash. If either, or both, of these occur, then we could see a significant gap emerge between what investors were willing to pay for in the past, and where COST is trading currently (latest close price of $58.58).

COST Dividends

While it is not necessary to pay an attractive dividend or a dividend at all, to receive a positive rating from Ockham, we view dividends as an additionally helpful measure in determining the future potential of any company.

In COST’s case, the estimated annual dividend is $0.72 resulting in a current dividend yield of 1.23%. Similar to our review of Sales and Cash Earnings per share, we evaluate dividend yields from COST against the historic high and low levels over the past 10 years. The highest dividend yield from COST over this period was 2.22% while the lowest dividend yield was 0.00% Therefore, the current dividend yield of COST is above the historical median by 10.81%. This is definitely a positive in our view.

Peer Comparison

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Costco Wholesale Corp. Industry Grouping

(2/8/2010)
Company Ticker Market Cap (Ml) Latest
Price
Price/Cash Earnings Price/Sales 5-Yr. Rev.
Growth Rate
5-Yr.
Avg. ROE.
Current 10-Yr. Range* Current 10-Yr. Range*
Peer Company Averages (not including COST) 10.70 5.76 » 46.21 1.25 0.57 » 6.93 13.82% 19.57%
*10 year range does not include current year values
Walgreen Company WAG $32.8 Billion $33.29 10.64 7.02 » 40.49 0.51 0.33 » 1.89 11.05% 16.80%
Lowe's Companies, Inc. LOW $32.0 Billion $21.76 9.15 5.51 » 24.44 0.68 0.37 » 1.72 9.36% 17.50%
eBay, Inc. EBAY $29.1 Billion $22.49 13.28 5.58 » 113.65 3.36 1.31 » 26.74 31.59% 10.36%
Costco Wholesale Corp. COST $25.5 Billion $58.14 13.95 7.36 » 22.93 0.35 0.19 » 0.60 8.22% 12.30%
The TJX Companies, Inc. TJX $15.9 Billion $37.79 10.16 5.51 » 15.99 0.82 0.39 » 1.05 7.35% 37.28%
Kohl's Corp. KSS $15.1 Billion $49.20 10.25 5.19 » 36.47 0.90 0.45 » 3.23 9.77% 15.90%
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Fox Business

News Developing on Fox Business for COST

As always, the latest news on COST is available to Ockham clients through RazorWire, and it was mentioned recently on Fox Business.

The Motley Fool CAPS data suggests that investors believe Costco Wholesale Corporation will beat the market in the foreseeable future. As we analyze the results from RazorWire, one thing we do is rank each stock in terms of amount of news coverage. Recently, COST has been less covered in the news compared to the rest of our universe of stocks. After factoring in the current fundamentals versus their historically normal ranges, we have established a Fairly Valued stance on COST.

“… COSTCO, vodafone and other names that means 95 or moving to the down side. That includes the usual suspects the big technology names like apple, a google, until, you can see ... …”

Street Signs

News Developing on Street Signs for COST

Costco Wholesale Corporation is one of the thousands of companies that Ockham has news analytics on, and it was recently discussed on Street Signs.

As we analyze the results from RazorWire, one thing we do is rank each stock in terms of amount of news coverage. Recently, COST has been less covered in the news compared to the rest of our universe of stocks. After factoring in the current fundamentals versus their historically normal ranges, we have established a Fairly Valued stance on COST. The Motley Fool CAPS data suggests that investors believe Costco Wholesale Corporation will beat the market in the foreseeable future.

“… COSTCO up. Lieu lieu lemon down 4%. Retailers the only place where there's any green outside of cisco. Back to you. > > > …”

Fox Business

News on COST From the Pundits on Fox Business

As always, the latest news on COST is available to Ockham clients through RazorWire, and it was mentioned recently on Fox Business.

As we analyze the results from RazorWire, one thing we do is rank each stock in terms of amount of news coverage. Recently, COST has been less covered in the news compared to the rest of our universe of stocks. After factoring in the current fundamentals versus their historically normal ranges, we have established a Fairly Valued stance on COST. The Motley Fool CAPS data suggests that investors believe Costco Wholesale Corporation will beat the market in the foreseeable future.

“… But the discount retailers, like COSTCO, shibani mentioned, their international sales were very strong. But u. S. Same-store sales were flat for COSTCO. Target posted up . …”

Fox Business

Notice a Discussion Covering COST Appeared Recently in the Financial News

As always, the latest news on COST is available to Ockham clients through RazorWire, and it was mentioned recently on Fox Business.

Costco Wholesale Corporation receives our Fairly Valued rating in our latest report because the current price does not seem out of line with the fundamentals. We noticed recently that in comparison to all other stocks we analyze in the news; COST has received less coverage from the financial media in business television and blogs. Crowd sentiment is leaning to the bearish side, according to the robust data set collected by the Motley Fool CAPS survey.

“… I wanted to point out COSTCO -- there's the right chart. COSTCO showed that same-store sales jumped 25% internationally, 4% right here on our shores so you are seeing some ... …”

Fox Business

See More News on COST from Fox Business

The latest news on Fox Business in regards to COST came through on RazorWire recently.

When looking at our entire coverage universe and ranking stocks by the attention they receive on RazorWire, it is clear that Costco Wholesale Corporation has been talked about more than normal recently. The Motley Fool CAPS data suggests that investors believe Costco Wholesale Corporation will beat the market in the foreseeable future. After factoring in the current fundamentals versus their historically normal ranges, we have established a Fairly Valued stance on COST.

“… COSTCO were flat. Target sales were up 1/2%. And fred's blaming ice storm and snowy weather for a lack of sales. Their sales were down about 2%. …”

Squawk Box

Stay Current on COST's News on Squawk Box

Staying informed on the news is invaluable for investors, and RazorWire has captured a recently discussion on COST from Squawk Box.

Crowd sentiment is favorable on this stock, as measured by the Motley Fool CAPS survey. In comparison to the other stocks that we follow, Costco Wholesale Corporation has seen more discussion in relation to its normal ranking among the group. Be aware that the news sources we track are focusing on this stock more often these days. The Ockham valuation currently has a Fairly Valued stance on COST because it trades within the price range that we would expect given current market conditions and fundamentals.

“… There was some news, I think it was yesterday, COSTCO, the korean steel company, but out a press release and said warren buffett plans to buy more shares in the future. …”

Mad Money

Stay Current on COST's News on Mad Money

Staying informed on the news is invaluable for investors, and RazorWire has captured a recently discussion on COST from Mad Money.

The Ockham valuation currently has a Fairly Valued stance on COST because it trades within the price range that we would expect given current market conditions and fundamentals. In comparison to the other stocks that we follow, Costco Wholesale Corporation has seen more discussion in relation to its normal ranking among the group. Be aware that the news sources we track are focusing on this stock more often these days. Crowd sentiment is favorable on this stock, as measured by the Motley Fool CAPS survey.

“… If you want to upgrade the grid cooper is a one-stop shop like COSTCO -- maybe like walmart. The question for a company this size is whether or not the smart grid is big enough ... …”

The Call

The Call Has News on COST

The latest news from The Call on COST is available through Ockham's news analytics platform RazorWire.

Crowd sentiment is leaning to the bearish side, according to the robust data set collected by the Motley Fool CAPS survey. Ranking all stocks in terms of news coverage offers some interesting data. In the case of COST, it is getting significantly more attention in recent news coverage than we are used to seeing. Costco Wholesale Corporation receives our Fairly Valued rating in our latest report because the current price does not seem out of line with the fundamentals.

“… Morgan raised q4 earnings 4 cents above the street and they own COSTCO and walmart and she'll be on fast honey money, in a half hour. I haven't had my coffee yet, people. …”

The Call

The Call Brings News Related to Costco Wholesale Corporation

News has broken via the television and viral blogs regarding COST, so investors should take an interest in learning what was said.

The Motley Fool CAPS data suggests that investors believe Costco Wholesale Corporation will beat the market in the foreseeable future. After factoring in the current fundamentals versus their historically normal ranges, we have established a Fairly Valued stance on COST. When looking at our entire coverage universe and ranking stocks by the attention they receive on RazorWire, it is clear that Costco Wholesale Corporation has been talked about more than normal recently.

“… target is taking on COSTCO and sam's club by testing in-store bulk sales, but the strategy may be a little bit off the mark. Cnbc's jane wells is in los angeles with more. …”

Countdown to the Closing Bell

Countdown to the Closing Bell Mentioned Sentiment on Costco Wholesale Corporation Recently

Countdown to the Closing Bell talked about the sentiment surrounding COST and the way they are perceived in the marketplace.

We noticed recently that in comparison to all other stocks we analyze in the news; COST has received less coverage from the financial media in business television and blogs. Crowd sentiment is leaning to the bearish side, according to the robust data set collected by the Motley Fool CAPS survey. Costco Wholesale Corporation receives our Fairly Valued rating in our latest report because the current price does not seem out of line with the fundamentals.

“… Yesterday it was hovering around as far as the discounters, some of them did quite quell including cost -- quite well, including COSTCO, target. …”

View All Costco Wholesale Corp. Stock News

Key Fundamentals

COST - Costco Wholesale Corporation Fundamentals
Price (2/9 2:35PM) $58.70
Volume (2/9 2:35PM) 1.7 Million
Last Close Price $58.14
10 Day Average Volume 4.3 Million
13 Week Price Range $56.75 - $61.25
52 Week Price Range $38.17 - $61.25
LTM Revenue $73.0 Billion
 
Shares Outstanding (08/2009) 439.3 Million
Market Capitalization $25.5 Billion
Shares Held By Institutions 352.5 Million
Institutional Holders 930
% Shares Held By Institutions 81.10%
Earnings Per Share (EPS) $2.47
P/E Ratio 23.40
Book Value Per Share $23.55
 
Gross Margin 14.60%
Annual Dividend 0.72
Dividend Yield 1.20%
Beta 0.79
Fiscal Year Ends August

About Costco Wholesale Corp.

Costco Wholesale Corporation is considered to operate in the Services sector. They specifically operate in the Discount, Variety Stores business segment contained within the Retail industry.

The Company operates membership warehouses, which offer low prices on a limited selection of nationally branded and selected private-label products in a range of merchandise categories.