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Stock AnalysisTicker: $COST
Stock Price: $365.00
Sector: Consumer Defensive | Discount Stores
Market Cap: 160.87 B
Forward P/E: 34.06
Rev Q/Q: 12.40%
Dividend Per Share: 2.80
Current Div Yield: 0.77%
Payout Ratio: 29%
5-Year Dividend Growth: 12%
1/12
P/S Ratio: 0.96
Debt/Eq : 0.45
Current Ratio: 1.10
Raised dividends for 16 years consecutively
2/12
Debt/Eq : 0.45
Current Ratio: 1.10
Raised dividends for 16 years consecutively
2/12
Business Overview
Costco Wholesale Corporation, together with its subsidiaries, engages in the operation of membership warehouses in the United States, Puerto Rico, Canada, the United Kingdom, Mexico, Japan, Korea, Australia, Spain, France, Iceland, China, and Taiwan.
3/12
Costco Wholesale Corporation, together with its subsidiaries, engages in the operation of membership warehouses in the United States, Puerto Rico, Canada, the United Kingdom, Mexico, Japan, Korea, Australia, Spain, France, Iceland, China, and Taiwan.
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Business Summary
Costco was founded in 1976 and pioneered the membership warehouse. The company is one of the world’s largest sellers of groceries, alcohol, diamonds, electronics, prescription drugs, tires, gasoline, and even travel services. Costco operates over 785 stores
4/12
Costco was founded in 1976 and pioneered the membership warehouse. The company is one of the world’s largest sellers of groceries, alcohol, diamonds, electronics, prescription drugs, tires, gasoline, and even travel services. Costco operates over 785 stores
4/12
While Costco is the world’s third-largest retailer by sales, the majority of its profits come from its membership fees which make up about 2% of revenue but account for about 70% of operating income.
5/12
5/12
Costco is heavily reliant on its operations in the US, however, they have been more recently focused on international expansion, Sales are as follows
•United States: 73% of revenue
•Canada: 14% of revenue
•Other International: 13% of revenue
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•United States: 73% of revenue
•Canada: 14% of revenue
•Other International: 13% of revenue
6/12
One of the most impressive facts about Costco, is that they boast an incredible, average renewal rate of memberships at 90%.
This comes in an industry where there is almost no loyalty when it comes to shopping for groceries.
7/12
This comes in an industry where there is almost no loyalty when it comes to shopping for groceries.
7/12
Costco does leverage its size in similar ways to Walmart in that they are able to create more favorable terms for themselves and pass those savings on to the customers.
They operate with economies of scale, intentionally limited quantities, and a loyal customer base.
8/12
They operate with economies of scale, intentionally limited quantities, and a loyal customer base.
8/12
Risks
Up until now, Costco has not shown any issues with its periodic raises in membership fees. Given that the membership fee is where a large portion of operating income comes from, the company could face large headwinds, if they ever reach that point.
9/12
Up until now, Costco has not shown any issues with its periodic raises in membership fees. Given that the membership fee is where a large portion of operating income comes from, the company could face large headwinds, if they ever reach that point.
9/12
Another risk would be is that their largest opportunities are overseas. With that comes many risks such as having to build out all new relationships and supply chains that will allow them to offer their extremely low prices.
10/12
10/12
To close, $COST does look very expensive and does always appear to be priced at a premium. The company has a strong mix of both price appreciation and dividend growth.
11/12
11/12
The stock rarely pulls back, so if you are interested in the company you will likely have to pay up, for this premium blue-chip company.
12/12
12/12
