Costco Wholesale Corp (COST, Financial) has recently captured the attention of investors and financial analysts alike, thanks to its strong financial performance. With a current share price of $843.73, despite a slight daily decrease of 0.22%, Costco has shown a notable three-month growth of 16.68%. A detailed analysis, supported by the GF Score, indicates that Costco is poised for significant future growth.
What Is the GF Score?
The GF Score is a proprietary ranking system developed by GuruFocus, assessing stocks based on five key valuation aspects. These aspects have been proven to correlate with long-term stock performance from 2006 to 2021. Stocks with higher GF Scores typically yield better returns. The GF Score ranges from 0 to 100, with 100 indicating the highest potential for outperformance. Costco Wholesale Corp boasts a GF Score of 92, reflecting its strong potential for market outperformance.
- Financial strength rank: 8/10
- Profitability rank: 9/10
- Growth rank: 10/10
- GF Value rank: 3/10
- Momentum rank: 9/10
Understanding Costco Wholesale Corp's Business Model
Costco operates a membership-based retail model focused on selling bulk quantities at low prices. Its no-frills approach allows for significant cost savings, which are passed on to consumers, resulting in high sales volumes and strong profits despite thin margins. With over 600 warehouses in the U.S. and a 60% market share in the domestic warehouse club industry, plus 270 international warehouses, Costco's market cap stands impressively at $374.05 billion with sales reaching $253.70 billion.
Financial Strength and Stability
Costco's financial strength is evident in its robust balance sheet and impressive Interest Coverage ratio of 51.27, significantly above the benchmark set by Benjamin Graham. Additionally, its Altman Z-Score of 9.38 and a low Debt-to-Revenue ratio of 0.04 further solidify its financial health.
Profitability and Growth Metrics
Costco's Profitability Rank is enhanced by its increasing Operating Margin, which has grown consistently over the past five years. The company's commitment to growth is also reflected in its 13.2% 3-Year Revenue Growth Rate, outperforming 75.43% of its industry peers.
Conclusion: A Promising Outlook for Costco Wholesale Corp
Considering Costco Wholesale Corp's robust financial strength, impressive profitability, and consistent growth metrics, the GF Score highlights the company's exceptional position for potential market outperformance. Investors looking for similar opportunities can explore more companies with strong GF Scores through the GF Score Screen.
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.
