COST
Costco Wholesale Corporation$982.57
Sell
Target $628.86
Report: Mar 07, 2026Consumer Defensive • Discount Stores • Mature CompounderSnapshot
Decision-first overview with recommendation, valuation anchor, and current setup.
Company Overview
Research Snapshot
Price History
Pelican View
Current$982.57-36.0%
Rec: SellConviction: High
Entry Target
N/A
N/A
Fair Value
$628.86
(36% below current)
Stop Loss
N/A
N/A
Position Size
None
Time Horizon
N/A
Key Metrics
Live Snapshot
Market Data
52 Week High$1,067.08
52 Week Low$844.06
Avg. 3 Month Volume2.22M
Efficiency
LTM Gross Margin12.9%
LTM EBITDA Margin5.0%
LTM EBIT Margin4.0%
LTM Operating Margin3.8%
LTM ROA10.7%
LTM ROE28.8%
LTM ROIC34.8%
LTM ROCE29.2%
Capital Structure
Market Cap (MM)$442.1B
Enterprise Value (MM)$432.9B
Shares Outstanding443.95M
Total Debt (MM)$8.16B
Cash & Equivalents (MM)$17.38B
LTM Net Debt (MM)$-9.22B
LTM Net Debt/EBITDA-0.6x
Growth
TTM Rev. Growth8.4%
Last 3-Yr Rev. CAGR6.9%
Last 3-Yr EBITDA CAGR10.6%
Last 3-Yr EPS CAGR12.2%
Valuation
Street Target Price$1,061.33
LTM EV/Revenue1.5x
LTM EV/Gross Profit11.7x
LTM EV/EBIT37.5x
LTM EV/EBITDA30.1x
LTM P/E51.7x
LTM EV/FCF47.6x
LTM P/FCF48.6x
LTM P/TB5.3x
LTM P/B13.8x
Dividend Yield0.5%
Payout Ratio27.0%
Executive SummarySituation: Current price is $982.57 versus fair value $628.86 (-36.0% expected return), and valuation confidence is stable. Debate: Bull case depends on Earnings Normalization: As the benefit of recent membership fee hikes is lapped, the market will focus on the underlying 3.8% operating margins, potentially triggering a multiple re-rating. Bear case centers on Multiple De-rating: The primary risk to the thesis is that the market continues to ignore valuation fundamentals, maintaining a 50x+ P/E indefinitely. Conclusion: Recommendation is Sell with no position, pending a materially better risk/reward setup.
Bull Case
Durable membership model with 92.9% renewal rates; high ROIC of 25.3% driven by efficient asset turnover; consistent warehouse expansion pipeline of 28-30 net new units annually.
Bear Case
Extreme valuation at 52.5x P/E vs 5-year average of 44.1x; rising wage inflation adding 13-14 bps to SG&A; significant insider selling totaling $36.7M with zero purchases.
Key Catalysts
Mid-Term (6-18 months)Impact: High
Earnings Normalization: As the benefit of recent membership fee hikes is lapped, the market will focus on the underlying 3.8% operating marg...
Near-Term (0-6 months)Impact: Moderate
Wage Inflation Realization: Continued 13-14 bps headwinds from wage investments will likely prevent the margin expansion the market is curre...
Long-Term (18+ months)Impact: Moderate
Costco is relevant for analysis now because the stock is trading near all-time highs ($996.75) while insiders are selling at an accelerated...
Primary Risks
Concern: High
Multiple De-rating: The primary risk to the thesis is that the market continues to ignore valuation fundamentals, maintaining a 50x+ P/E ind...
Concern: Medium
Wage and Labor Inflation: Permanent increases in the cost of labor could structurally impair the low-margin warehouse model.
Concern: Medium
Stewardship is adequate but marred by weak alignment. While the board possesses deep expertise (Blackstone, CVS, HBC), the 0.1% insider owne...
Recent Activity
2025-03-07SEC Filing (8-K)
-6.07%Costco reports Q2 FY2025 results with 9.1% sales increase
2024-03-08SEC Filing (8-K)
-7.64%Costco reports Q2 FY2024 results with 5.7% sales increase
2022-05-26SEC Filing (8-K)
+5.65%Costco reports Q3 FY2022 and 36-week results with 16.3% sales growth
2021-12-10SEC Filing (DEFA14A)
+6.58%Costco Wholesale Corporation files definitive proxy statement for annual meeting
Valuation Table
9.8/10Decision Grade
Scenario Range
$418
Bear
$583
Base
$703
Bull
$983