COSTCO WHOLESALE CORP /NEW (COST) Stock Analysis
COSTCO WHOLESALE CORP /NEW (COST) Stock Analysis
Analysis from 10-Q filed 2025-12-17. Data as of Q1 2026.
Overall Grade: F (Concerning)
COSTCO WHOLESALE CORP /NEW faces challenges in financial performance that warrant careful analysis.
| Metric | Value | Context |
|---|---|---|
| ROIC | 23.1% | Above industry average |
| FCF Margin | 3.2% | Cash flow pressure |
| Debt/Equity | 0.2x | Conservative leverage |
Investment Thesis: Strong return on invested capital of 23.1% suggests durable competitive advantages and efficient capital allocation.
Explore COSTCO WHOLESALE CORP /NEW: Earnings History | Filing Intelligence | ROIC Analysis
Profitability: COSTCO WHOLESALE CORP /NEW earns 23.1% ROIC, Top 25% in Consumer Discretionary
COSTCO WHOLESALE CORP /NEW's trailing-twelve-month ROIC of 23.1% ranks Top 25% in Consumer Discretionary companies (sector median: 8.5%), driven by NOPAT margin of 2.9% combined with asset turnover of 3.6x. Source: 10-Q filed 2025-12-17. Gross margin of 12.9% with operating margin at 3.8% reflects a competitive pricing environment.
| Metric | COST | Rating | Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 23.1% | Excellent | Above sector median of 8.5% |
| Return on Equity (ROE) | 29.6% | Excellent | Efficient use of shareholder equity |
| Gross Margin | 12.9% | Warning | Competitive pricing environment |
| Operating Margin | 3.8% | Warning | Moderate operational efficiency |
Cash Flow: COSTCO WHOLESALE CORP /NEW generates $9.1B FCF at 3.2% margin, positive NaN/8 quarters
COSTCO WHOLESALE CORP /NEW generated $9.1B in free cash flow (TTM), a 3.2% FCF margin, a margin that ranks Top 50% in Consumer Discretionary. Operating cash flow exceeds net income by 1.8x, indicating high earnings quality. FCF was positive in N/A of the last 8 quarters. Source: 10-Q filed 2025-12-17.
| Metric | COST | Rating | Context |
|---|---|---|---|
| Free Cash Flow Margin | 3.2% | Warning | Thin cash margins |
| Free Cash Flow (TTM) | $9.1B | Good | Positive cash generation |
| OCF/Net Income | 1.8x | Excellent | High earnings quality |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
Balance Sheet: COSTCO WHOLESALE CORP /NEW at 0.2x leverage
COSTCO WHOLESALE CORP /NEW's debt-to-equity ratio of 0.2x reflects conservative leverage. Net cash position of $12.5B provides financial flexibility. Source: 10-Q filed 2025-12-17.
| Metric | COST | Rating | Context |
|---|---|---|---|
| Debt to Equity | 0.2x | Excellent | Conservative capital structure |
| Net Cash Position | $12.5B | Excellent | Net cash positive |
Valuation: COSTCO WHOLESALE CORP /NEW trades at 52.9x earnings
COSTCO WHOLESALE CORP /NEW trades at a P/E of 52.9x. Free cash flow yield of 2.0% reflects market expectations for growth.
| Metric | COST | Rating | Context |
|---|---|---|---|
| P/E Ratio | 52.9x | Warning | Premium valuation |
| EV/Sales | 1.5x | Excellent | Attractive revenue multiple |
| FCF Yield | 2.0% | Adequate | Lower cash yield |
| Dividend Yield | 0.5% | Adequate | Growth focus over income |
Capital Allocation: COSTCO WHOLESALE CORP /NEW returns 0.7% shareholder yield
COSTCO WHOLESALE CORP /NEW's total shareholder yield is 0.7% (dividends 0.5% + buybacks 0.2%). Source: 10-Q filed 2025-12-17.
| Metric | COST | Rating | Context |
|---|---|---|---|
| Total Shareholder Yield | 0.7% | Adequate | Dividend + buyback yield combined |
| Buyback Yield | 0.2% | Adequate | Minimal buyback activity |
| Total Capital Returned (TTM) | $910.0M | Good | Dividends + buybacks returned to shareholders |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 23.1% | Top 25% | 2.7x above |
| Free Cash Flow Margin | 3.2% | Top 50% | 1.2x above |
| Gross Margin | 12.9% | Bottom 25% | 0.3x below |
| Operating Margin | 3.8% | Bottom 50% | 0.9x below |
| Return on Equity (ROE) | 29.6% | Top 25% | 2.9x above |
| P/E Ratio | 52.9x | N/A | - |
Financial Scorecard
| Metric | COST | Rating | Sector Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 23.1% | Excellent | Top 25% of sector (median: 8.5%) |
| Free Cash Flow Margin | 3.2% | Warning | Top 50% of sector (median: 2.7%) |
| Gross Margin | 12.9% | Warning | Bottom 25% of sector (median: 39.1%) |
| Debt to Equity Ratio | 18.0% | Excellent | Conservative capital structure |
| P/E Ratio (Price-to-Earnings) | 52.9x | Warning | High expectations priced in |
| Free Cash Flow Yield | 2.0% | Warning | Growth-focused valuation |
Frequently Asked Questions
Q: What is COSTCO WHOLESALE CORP /NEW's Return on Invested Capital (ROIC)?
COSTCO WHOLESALE CORP /NEW (COST) has a trailing twelve-month Return on Invested Capital (ROIC) of 23.1%. This compares above the sector median of 8.5%. An ROIC above 20% indicates exceptional capital efficiency and strong competitive advantages.
Q: What is COSTCO WHOLESALE CORP /NEW's Free Cash Flow Margin?
COSTCO WHOLESALE CORP /NEW (COST) has a free cash flow margin of 3.2%, generating $9.1 billion in free cash flow over the trailing twelve months. A thin FCF margin may indicate heavy reinvestment or operational challenges.
Q: Is COSTCO WHOLESALE CORP /NEW stock overvalued or undervalued?
COSTCO WHOLESALE CORP /NEW (COST) trades at a P/E ratio of 52.9x, which is above the sector median of N/A. The EV/Sales multiple is 1.5x. Free cash flow yield is 2.0%, reflecting growth expectations priced into the stock.
Q: Does COSTCO WHOLESALE CORP /NEW pay a dividend?
COSTCO WHOLESALE CORP /NEW (COST) currently pays a dividend yield of 0.5%. Including share buybacks, the total shareholder yield is 0.7%. The relatively low yield suggests the company prioritizes growth reinvestment over income distribution.
Q: What is COSTCO WHOLESALE CORP /NEW's revenue and earnings growth?
COSTCO WHOLESALE CORP /NEW (COST) grew revenue by 8.4% year-over-year. Earnings per share increased by 12.3% compared to the prior year. Modest growth indicates a mature business with stable demand.
Q: Is COSTCO WHOLESALE CORP /NEW buying back stock?
COSTCO WHOLESALE CORP /NEW (COST) repurchased $910.0 million of stock over the trailing twelve months. This represents a buyback yield of 0.2%.
Q: How does COSTCO WHOLESALE CORP /NEW compare to competitors in Consumer Discretionary?
Compared to other companies in Consumer Discretionary, COSTCO WHOLESALE CORP /NEW (COST) shows: ROIC of 23.1% is above the sector median of 8.5% (Top 13%). FCF margin of 3.2% exceeds the sector median of 2.7% (Top 47% of sector). Gross margin at 12.9% is 26.2 percentage points lower than sector peers. These rankings are based on MetricDuck's analysis of all Consumer Discretionary companies with available SEC filings.
Q: What warning signs should I watch for with COSTCO WHOLESALE CORP /NEW?
Investors in COSTCO WHOLESALE CORP /NEW (COST) should monitor these potential warning signs: 1) FCF margin is thin at 3.2%, leaving limited buffer for economic downturns. 2) ROIC has been declining, potentially signaling deteriorating competitive position. Regular monitoring of SEC filings and quarterly trends is recommended.
Data Source: Data sourced from 10-Q filed 2025-12-17. TTM metrics as of Q1 2026.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
Scope: This analysis covers SEC filing fundamentals — profitability, cash flow, balance sheet, and valuation metrics. For analyst estimates and price targets, consult sell-side research.
This analysis is for informational purposes only and does not constitute investment advice.