On October 23, 2023, Claudine Adamo, Executive Vice President of Costco Wholesale Corp (COST, Financial), sold 2,565 shares of the company. This move is part of a trend observed over the past year, where the insider has sold a total of 4,565 shares and made no purchases.
Costco Wholesale Corp is a multinational corporation that operates a chain of membership-only warehouse clubs. As of 2023, Costco was the fifth largest retailer in the world, and the world's largest retailer of choice and prime beef, organic foods, rotisserie chicken, and wine. The company's business model is to generate high sales volumes and rapid inventory turnover by offering a limited assortment of merchandise at low prices.
The insider's recent sell-off is part of a broader trend within the company. Over the past year, there have been 17 insider sells and no insider buys. This could be an indication of the insiders' sentiment about the company's future prospects.
On the day of the insider's recent sell, shares of Costco Wholesale Corp were trading for $548.92 apiece, giving the company a market cap of $244.32 billion. The price-earnings ratio is 38.97, which is higher than the industry median of 15.51 and the company’s historical median price-earnings ratio. This suggests that the stock is currently overvalued compared to its peers and its own historical data.
However, the price-to-GF-Value ratio of 0.99 indicates that the stock is fairly valued based on its GF Value. The GF Value is an intrinsic value estimate developed by GuruFocus, calculated based on historical multiples, a GuruFocus adjustment factor, and future estimates of business performance from Morningstar analysts.
In conclusion, the insider's recent sell-off, along with the overall trend of insider selling over the past year, could be a signal for investors to exercise caution. While the stock appears to be fairly valued based on its GF Value, its high price-earnings ratio compared to the industry median and its own historical data suggests that it may be overvalued. Investors should keep a close eye on the company's future performance and any further insider trading activity.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
