QualityDipStocks / Consumer Discretionary · Retail stores
Costco COST
Not in a dip by our rules: 7% below its 52-week high.
A quality company trading well above our fair value estimate, 5% over its Market Value.
- Fair value est.
- $437.09−57%
- Market Value
- $964.72price +5%
- Off 52-wk high
- −7%
- Risk vs market
- Lowbeta −0.20
5 bullish · 5 bearish See why
Key levels
Every level vs today’s $1,012
- Fair value est.base case$437.09−56.8%
- 52-wk lowlowest close, 1 year$850.00−16.0%
- Market Valueavg paid since Sep 24$964.72−4.7%
- PriceFri Oct 30 close$1,012you are here
- 52-wk highhighest close, 1 year$1,094+8.1%
Fair value estimate
How the range is computed
Ten-year free-cash-flow DCF. Same 10-year free-cash-flow model as the base: discount rate 9.5% ±1 point and growth 7.8% ±2 points. Bear = 10.5% and 5.8%; bull = 8.5% and 9.8% (both fade to 3%). A model estimate from public filings, not a forecast of where the price will go.
Price is above even the bull case.
What the price implies To be worth today’s price, COST’s free cash flow would need to grow about 23% a year for five years; our estimate uses 8%.
Risk vs market
How risk vs market is measured
One year of daily returns (Oct 30 to Oct 30, 252 sessions). Beta = how much COST moved for each 1% move in the S&P 500 (SPY); 1.0 moves with the market. Volatility is the yearly standard deviation of daily returns. Past behavior, not a forecast.
Has moved mostly independently of the market, but its own price swings are 1.5× the S&P 500’s (it moves on its own news).
- Beta vs S&P 500
- -0.20
- Volatility
- 20% vs 13% SPY
- Correlation SPY
- −0.13
- Correlation QQQ
- −0.23
Bull vs bear
Rule-based from the data on this page, strongest first. Not advice.
Top bullish points 5 of 5
ProfitabilityReturn on invested capital of 43%, above the 9.5% discount rate our DCF uses.
ProfitabilityReturn on equity of 28% over the last 12 months.
Balance sheetNet cash of $15.1B: cash and short-term investments exceed debt (Aug 30, 2026).
GrowthSales grew 10% to $303B over the last 12 months vs the 12 months before (SEC filings).
QualityPasses all four of our quality checks: cash generation, returns on capital, growth and balance sheet.
Top bearish points 5 of 5
ValuationOur DCF fair value estimate is $437.09, 57% below the price.
ValuationP/E of 48.8× vs a 20.9× median for the 169 Consumer Discretionary companies we cover.
ValuationEV/EBITDA of 30.3×, above the 12.8× median for the 113 Consumer Discretionary companies we cover.
ProfitabilityReturn on equity fell 5 points in two fiscal years, to 26% in FY2026.
ValuationPrice / free cash flow of 48×: a rich price for the cash it generates today.
Who’s talking about it
Notable investors, executives, analysts and public figures on Costco in the last 48 hours. Headlines as published, each linked. Their words, not ours.
No notable mentions in the last 48 hours. Checked Nov 1, 9:09 PM ET.
Compare with peers
Closest in size in Retail stores
All fundamentals
P/E 48.8 · FCF yield 2.1% · ROE 28%
Valuation
- P/E
- 48.8×3-yr-end avg 50.4× · Consumer Discretionary median 20.9×
- Price / FCF
- 47.9×
- FCF yield
- 2.1%
- EV / EBITDA
- 30.3×
- Price / sales
- 1.48×
- Price / book
- 12.56×
- Market cap
- $450Bprice × diluted shares
- Enterprise value
- $435B
Growth
- Revenue, 12 months
- $303B
- Sales growth, 12 months
- +10.1%vs the 12 months before
- Sales growth, 3 yrs
- +7.8%/yrfrom FY2023
- Diluted EPS, 12 months
- $20.76
- EPS growth, last FY
- +14.0%
- Net income, 12 months
- $9.2B
- Net income growth
- +14%12 months vs before
Profitability
- Gross margin
- 12.8%
- Operating margin
- 3.9%
- Net margin
- 3.0%
- FCF margin
- 3.1%
- Return on equity
- 28%
- Return on invested capital
- 43%
Balance sheet
- Cash & short-term inv.
- $21.3B
- Total debt
- $6.2B
- Net cash
- $15.1B
- Debt / equity
- 0.17×
- Interest coverage
- 80.6×operating income / interest
Cash flow & returns
- Free cash flow, 12 months
- $9.4B
- FCF growth, 12 months
- +20%
- Dividend yield
- 0.55%$2.5B paid
- Payout ratio
- 27%
- Buybacks, 12 months
- $848M0.2% of market cap
- Share count, 1 year
- −0.1%diluted shares vs a year ago
- Stock-based comp
- $924M
Trailing 12 months to Aug 30, 2026; balance sheet at Aug 30, 2026. From Costco’s SEC filings. Sparklines show up to six fiscal years. n/a means we don’t hold that number, with the reason. How each is computed.
Valuation details
DCF $437.09 · MV $964.72 · FCF value $527.83
Assumes 7.8% growth for 5 years (revenue grew 7.8% a year FY23–FY26), fading to 3%; 9.5% discount rate, 3% terminal growth. FCF base $21.11 a share, trailing 12 months to Aug 31, 2026 (company filings via Yahoo Finance, checked against SEC).
How we got these
- Market Value: volume-weighted average close from Sep 25 (first full trading day after the filing) to Oct 30, 26 trading days. Simple average $964.39. Event: SEC 8-K Item 2.02 (earnings), filed Sep 24, 4:17 PM ET. Read the filing.
- Free cash flow, 12 months to Aug 31: $15.8B operating cash flow − $6.4B capex = $9.4B, or $21.11 a share on 0.44B diluted shares.
- DCF: free cash flow per share grows 8% a year for five years, from its FY2023–FY2026 revenue growth of 8% a year, fading to 3% by year ten; 9.5% discount rate, 3% terminal growth.
- FCF value: free cash flow per share ÷ 4%, the price at which the stock yields 4% in free cash flow.
Setup & signals
No setup armed
No setup armed, so there’s no trigger or stop to track yet. Reversal signal rules only arm once a company is in a dip.
Momentum & 52-week range
RSI 66 · 5 days +0.9%
The business
FCF $9.4B · Sales +11%
- Free cash flow, 12 months$9.4B
- Free-cash-flow yield2.1%
- Free-cash-flow margin3%
- Gross margin13%
- Operating margin4%
- Return on invested capital22%
- Return on equity29%
- Sales growth (latest quarter vs year-ago quarter)+11%
- Net debt / EBITDA−0.8×
Information only, not investment advice. Fair value estimates and talking points are rule-based model output from public data and can be wrong; stop levels are reference points, not orders. How every number is computed.
Get a text when COST fires a reversal signal
One text when a published rule fires on COST or any of the 333 quality companies we track: the ticker, the price, the stop and a link to the numbers. Nothing else.