Costco Wholesale Stock To $687?
Costco Wholesale (COST) stock has jumped 16% during the past month, and is currently trading at $983.25. Our multi-factor assessment suggests that it may be time to sell COST stock. We have, overall, a pessimistic view of the stock, and a price of $687 may not be out of reach. We believe there is a near-equal mix of good and bad in COST stock given its overall Moderate operating performance and financial condition. But keeping in mind its Very High valuation, we think that the stock is Unattractive.
Below is our assessment:
| CONCLUSION | |
|---|---|
| What you pay: | |
| Valuation | Very High |
| What you get: | |
| Growth | Moderate |
| Profitability | Very Weak |
| Financial Stability | Very Strong |
| Downturn Resilience | Strong |
| Operating Performance | Moderate |
| Stock Opinion | Unattractive |
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Let’s get into details of each of the assessed factors but before that, for quick background: With $437 Bil in market cap, Costco Wholesale provides membership warehouse retail services across multiple countries, offering groceries, sundries, liquor, pharmacies, opticals, food courts, hearing aids, and tire installation centers.
- The Risk Factors to Watch Out For in Costco Wholesale Stock
- What Could Light a Fire Under Costco Wholesale Stock
- Costco Wholesale Stock Hands $31 Bil Back – Worth a Look?
- Now Is Not The Time To Buy Costco Wholesale Stock
- How Does COST Stack Up Against Its Peers?
- Will You Be Comfortable Buying Costco Wholesale Stock?
[1] Valuation Looks Very High
| COST | S&P 500 | |
|---|---|---|
| Price-to-Sales Ratio | 1.6 | 3.4 |
| Price-to-Earnings Ratio | 52.5 | 24.8 |
| Price-to-Free Cash Flow Ratio | 48.4 | 21.6 |
This table highlights how COST is valued vs broader market. For more details see: COST Valuation Ratios
[2] Growth Is Moderate
- Costco Wholesale has seen its top line grow at an average rate of 6.7% over the last 3 years
- Its revenues have grown 8.3% from $259 Bil to $280 Bil in the last 12 months
- Also, its quarterly revenues grew 8.3% to $67 Bil in the most recent quarter from $62 Bil a year ago.
| COST | S&P 500 | |
|---|---|---|
| 3-Year Average | 6.7% | 5.6% |
| Latest Twelve Months* | 8.3% | 6.4% |
| Most Recent Quarter (YoY)* | 8.3% | 7.3% |
This table highlights how COST is growing vs broader market. For more details see: COST Revenue Comparison
[3] Profitability Appears Very Weak
- COST last 12 month operating income was $11 Bil representing operating margin of 3.8%
- With cash flow margin of 5.3%, it generated nearly $15 Bil in operating cash flow over this period
- For the same period, COST generated nearly $8.3 Bil in net income, suggesting net margin of about 3.0%
| COST | S&P 500 | |
|---|---|---|
| Current Operating Margin | 3.8% | 18.8% |
| Current OCF Margin | 5.3% | 20.5% |
| Current Net Income Margin | 3.0% | 13.1% |
This table highlights how COST profitability vs broader market. For more details see: COST Operating Income Comparison
[4] Financial Stability Looks Very Strong
- COST Debt was $8.1 Bil at the end of the most recent quarter, while its current Market Cap is $437 Bil. This implies Debt-to-Equity Ratio of 1.9%
- COST Cash (including cash equivalents) makes up $17 Bil of $83 Bil in total Assets. This yields a Cash-to-Assets Ratio of 20.8%
| COST | S&P 500 | |
|---|---|---|
| Current Debt-to-Equity Ratio | 1.9% | 19.4% |
| Current Cash-to-Assets Ratio | 20.8% | 7.2% |
[5] Downturn Resilience Is Strong
COST has been more resilient than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.
2022 Inflation Shock
- COST stock fell 31.5% from a high of $608.05 on 7 April 2022 to $416.43 on 20 May 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 7 December 2023
- Since then, the stock increased to a high of $1,076.86 on 13 February 2025 , and currently trades at $983.25
| COST | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -31.5% | -25.4% |
| Time to Full Recovery | 566 days | 464 days |
2020 Covid Pandemic
- COST stock fell 13.6% from a high of $324.08 on 20 February 2020 to $279.85 on 12 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 9 July 2020
| COST | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -13.6% | -33.9% |
| Time to Full Recovery | 119 days | 148 days |
2008 Global Financial Crisis
- COST stock fell 48.5% from a high of $74.66 on 8 July 2008 to $38.44 on 9 March 2009 vs. a peak-to-trough decline of 56.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 8 February 2011
| COST | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -48.5% | -56.8% |
| Time to Full Recovery | 701 days | 1,480 days |
But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read COST Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
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