Costco Wholesale Corp (COST, Financial) has recently captured the attention of investors and financial analysts alike, thanks to its strong financial performance and promising growth prospects. With its shares currently priced at $773.89, Costco has experienced a daily gain of 1.37% and a notable three-month change of 7.02%. A detailed analysis, supported by the GF Score, positions Costco Wholesale Corp as a prime candidate for significant future growth.
What Is the GF Score?
The GF Score is a proprietary ranking system developed by GuruFocus, assessing stocks across five key valuation aspects. This system has proven to correlate strongly 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, signaling strong future performance potential.
- 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 profit margins despite thin margins. With over 600 warehouses in the U.S. and a 60% market share in the domestic warehouse club industry, plus an additional 270 warehouses internationally, Costco's market presence is formidable.
Financial Strength and Stability
Costco's financial strength is evident in its impressive Interest Coverage ratio of 49.74, far surpassing the benchmark set by Benjamin Graham. Additionally, its Altman Z-Score of 8.94 indicates a strong buffer against financial distress, and a Debt-to-Revenue ratio of 0.04 showcases prudent debt management.
Profitability and Growth Metrics
Costco's Profitability Rank is enhanced by a consistent increase in its Operating Margin, which has grown steadily over the past five years. The company's 3-Year Revenue Growth Rate of 13.2% and EBITDA growth underscore its capacity for sustained expansion.
Conclusion: A Strong Candidate for Market Outperformance
Given Costco Wholesale Corp's robust financial strength, impressive profitability, and consistent growth metrics, the GF Score highlights the company's unparalleled position for potential outperformance. Investors looking for similar opportunities can explore more companies with strong GF Scores using 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.
