COST
Costco Wholesale CorporationConsumer Defensive / Discount StoresINTACTCostco Wholesale Corporation, together with its subsidiaries, engages in the operation of membership warehouses in the United States, Puerto Rico, Canada, Mexico, Japan, the United Kingdom, Korea, Australia, Taiwan, China, Spain, France, Iceland, New Zealand, and Sweden. It offers merchandise, including sundries, dry groceries, candies, coolers, freezers, deli, liquor, and tobacco; non-food merchandise comprising appliances, small electronics, health and beauty aids, hardware, lawn and garden, sporting goods, tires, toys and seasonal, automotive, stamps, tickets, apparel, furniture, domestics, housewares, special order kiosks, and jewelry; and fresh food, such as meat, produce, service deli, and bakery products. The company is also involved in warehouse ancillary operations, which include gasoline, pharmacies, optical, food courts, hearing-aid centers, and tire installation centers. In addition, it engages in e-commerce, business centers, travel, and other businesses. The company was formerly known as Costco Companies, Inc. and changed its name to Costco Wholesale Corporation in August 1999. Costco Wholesale Corporation was founded in 1976 and is based in Issaquah, Washington.
Price vs. Intrinsic Value Corridor
Overvalued vs DCF ($299.97)Historical market price overlaid against conservative DCF Fair Value & Benjamin Graham Margin of Safety bands.
2-Stage Discounted Cash Flow (DCF) Workbench
Conservative intrinsic value model based on owner cash generation over a 10-year investment horizon. Opens with LocalAlpha's baseline assumptions (matching the fair value shown above) — adjust any input to stress-test.
| Year | Yr 1 | Yr 2 | Yr 3 | Yr 4 | Yr 5 | Yr 6 | Yr 7 | Yr 8 | Yr 9 | Yr 10 |
|---|---|---|---|---|---|---|---|---|---|---|
| Projected FCF ($M) | $7,323 | $7,711 | $8,119 | $8,550 | $9,003 | $9,408 | $9,831 | $10,274 | $10,736 | $11,219 |
| Present Value (PV) | $6,718 | $6,490 | $6,270 | $6,057 | $5,851 | $5,610 | $5,378 | $5,156 | $4,943 | $4,739 |
Benjamin Graham & Buffett Value Models
Classical deep value metrics based on asset backing, normalized earnings power, and owner cash yield.
Calculated as √(22.5 × EPS × BVPS). The maximum theoretical price a defensive investor should pay based purely on asset book value and current earnings.
Formula: V = (EPS × (8.5 + 2g) × 4.4) / Y where g is the conservative 7-10 yr growth rate and Y is AAA Bond Yield.
True distributable cash flow: Net Income + D&A - Maintenance CapEx. Reflects the cash Buffett would extract without hurting unit volume.
Reverse DCF: Market Growth Expectation
HIGH BARRIERAt the current price of $902.38, the market is assuming the business will compound Free Cash Flow at 19.7% per year for the next decade with a 9% hurdle rate.
Surveil COST with Mathematical Margin of Safety Rules
Set non-negotiable floor rules for Costco Wholesale Corporation. If a newly filed quarterly 10-Q breaks your ROIC floor, operating margin boundary, or balance sheet leverage rules, receive an autonomous breach audit within 15 minutes.
ROIC > 15% • Margin > 15% • D/E < 0.5x
Current Margin 3.7% • Floor > 10%
Altman-Z > 2.6 • Current Ratio > 1.5x
Frequently Asked Questions: Costco Wholesale Corporation (COST) Intrinsic Valuation
Audited fundamentals, DCF intrinsic value sensitivity, and thesis break detection parameters for Costco Wholesale Corporation.
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