COST
COSTCO WHOLESALE CORP /NEW
Consumer Discretionary • CIK: 0000909832
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Market Cap
$452.18B
P/E (TTM)
52.9x
Rev Growth (TTM)
+8.4%
Net Margin (TTM)
3.0%
FCF Yield (TTM)
2.0%
FCF Margin (TTM)
3.2%
What Changed
10-Q Q2 FY2026 (filed 2026-03-11) vs 10-Q Q1 FY2026 (filed 2025-12-17)
Hidden Liability Risk Levellow→moderate
Critical Liability Findings Count1 item→3 items (two Kirkland Signature tequila class actions...
Accounting Aggressivenessneutral→conservative
Accounting Red Flagspresent→resolved
Earnings Quality Score8/10→7/10
Kirkland tequila class action resolution: two suits pending alleging product not...·Digitally-enabled comparable sales trajectory: Q2 +23% — flag deceleration below...·International margin durability: Canada 5.12% and Other International 4.77% are...
Filing Intelligence
6.0/10
10-Q filed Mar 11, 2026 • Q2 2026
Executive Summary
Capital expenditures are substantial ($6,500M planned for FY2026) focused on physical expansion and digital capabilities, funded by operations.. The company faces multiple significant legal...
Key Concerns
- ●Gross margins improved slightly, benefiting from warehouse ancillary businesses and a one-time legal settlement, despite pressures in core...
- ●Management maintains a confident tone, highlighting historical success in adapting to economic conditions and competition, while...
- ●The company faces multiple significant legal proceedings, including class actions related to product labeling and a False Claims Act...
Key Strengths
- ●The company achieved strong net sales growth of 9% driven by comparable sales increases and new warehouse openings.
- ●Operating expenses as a percentage of sales increased, primarily due to higher liability claims and preopening costs.
Cash Flow Health
Free Cash Flow8/8 positive
TTM$9.1B
Q2 '26
$1.7B-46%
Q1 '26
$3.2B+66%
FCF Margin
TTM3.2%
Q2 '262.5%-48%
Sector: 2.7%Above Avg
OCF Margin5.2%
OCF/NI1.76x
CapEx Coverage2.5x
FCF Yield2.0%
FCF Growth (2Y)+18%
Cash Conversion Cycle
2 days
DSO: 4+DIO: 28−DPO: 30
Capital Allocation & Returns
Growth Focused
Total Shareholder YieldTTM
TTM0.7%
Div Yield0.5%
+Buyback (TTM)0.2%
Prioritizing reinvestment over distributions
Dividend & Payout Metrics
Dividend Yield (TTM)0.5%
FCF Payout Ratio25.4%
Free Cash Flow (TTM)$9.1B
Stock Repurchases (TTM)$910.0M
Capital Return / FCF10.0%
Est. Dividends Paid (TTM)$2.3B
Shows how management rewards shareholders
Operational Efficiency & Returns
Return on Invested CapitalTTM
23.1%
Stable
-0.0% YoY-3.7%
P25MedianP75
75th pctl (med: 0.1%)
DuPont BreakdownROIC = Margin × Turn × (1+D/E)
NOPAT Margin
2.9%
8Q: 2.8%
Asset Turnover
3.65x
8Q: 3.47x
Leverage (1+D/E)
1.18x
D/E: 0.18x
DuPont: 12.3% ≈ 23.1% ROIC
Asset & CapEx Efficiency
Fixed Asset Turn
9.03x
8Q:8.46x
-57.3%
Invested Cap Turn
8.05x
8Q:8.00x
-144.6%
CapEx Intensity
16.6%
8Q:15.6%
CapEx/Depreciation
2.35x
Asset-based ROIC formula
QUARTERLY TRENDS
Last 8 quarters + TTM
| Metric | TTM | Q2 2026 | Q1 2026 | Q4 2026 | Q3 2025 | Q2 2025 | Q1 2025 | Q4 2025 | Q3 2024 |
|---|---|---|---|---|---|---|---|---|---|
Revenue | $286.3B | $69.6B↑3.4% | $67.3B↓21.9% | $86.2B↑36.3% | $63.2B↓0.8% | $63.7B↑2.5% | $62.2B↓22.0% | $79.7B↑36.2% | $58.5B |
Operating Income | $10.9B | $2.6B↑5.8% | $2.5B↓26.3% | $3.3B↑32.1% | $2.5B↑9.2% | $2.3B↑5.5% | $2.2B↓27.8% | $3.0B↑38.5% | $2.2B |
Net Income | $8.5B | $2.0B↑1.7% | $2.0B↓23.3% | $2.6B↑37.2% | $1.9B↑6.4% | $1.8B↓0.6% | $1.8B↓23.6% | $2.4B↑40.0% | $1.7B |
Operating Cash Flow | $15.0B | $3.0B↓36.1% | $4.7B↑21.2% | $3.9B↑11.8% | $3.5B↑25.9% | $2.7B↓15.7% | $3.3B↑10.2% | $3.0B↓1.4% | $3.0B |
Free Cash Flow | $9.1B | $1.7B↓46.0% | $3.2B↑66.3% | $1.9B↓18.4% | $2.3B↑44.6% | $1.6B↓19.3% | $2.0B↑44.5% | $1.4B↓28.7% | $1.9B |
Total Equity | N/A |
Valuation Analysis
Fair Value
Price-to-EarningsTTM
52.9x
Volatile
8Q: 215.0x-52%
High PEG ratio (4.3x) suggests expensive for growth
Valuation Lenses
Earnings
52.9x
vs – sector
Cash Flow
48.6x
EV/FCF vs –
Growth-Adj
4.3xPEG
Expensive for growth
Quality-Adj
2.3P/E per %ROIC
ROIC: 23.1%
Shareholder Returns
Dividend
0.5%
Buyback
0.2%
Total Yield
0.7%
Market Cap$452.18B
EV$442.23B
Multi-angle valuation analysis with sector context
Business Quality & Moat
Overall Quality Score
94/100
Exceptional
Composite score: Returns (40%) + Consistency (30%) + Earnings Quality (30%)
Returns on Capital
Return on Equity (ROE)Top 25%
29.6%
8Q:–
Return on Invested Capital (ROIC)Top 25%
23.1%
8Q:–
-3.7%
vs Sector:0.1%
DuPont Analysis (ROIC = NOPAT Margin × Asset Turnover)
NOPAT Margin: 2.9%
Asset Turnover: 3.65x
Earnings Quality
Cash Conversion
1.76x
OCF / Net Income ✓
FCF Consistency
–
Positive quarters
Competitive Moat Indicators
Pricing Power
Gross Margin12.9%
Capital Efficiency
Invested Capital Turnover8.05x
Working Capital
Cash Conversion Cycle2 days
Growth Quality & Momentum
Moderate Growth
Growth Quality Score
68/100
Growth 40%
Margins 30%
FCF 20%
Consistency 10%
Growth Rates
Revenue Growth YoY
8.4%
OpInc Growth YoY
12.5%
EPS Growth YoY
12.3%
FCF 3Y CAGR
18.5%
Growth Quality Analysis
✓Efficient Growth: Free cash flow growing faster than revenue
Margin Quality & Sustainability
High Quality
Profitability Cascade
Gross
12.9%
Operating
3.8%
Below Avg in sector
Net
3.0%
Margins Unknown
Earnings Quality Signals
SBC / Revenue
—
FCF vs Net Gap
+0.2 pts
FCF: 3.2% | Net: 3.0%
Quality = stability + cash conversion + low dilution
Balance Sheet & Solvency
Fortress
Net Debt / EBITDA
Net Cash
(0.0x)Net Cash: $12.48B
Interest Coverage
–
+Net cash position: $12.48B
Balance sheet risk & solvency analysis