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Costco Wholesale Piotroski F-Score

: 5 (As of Today)
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The zones of discrimination were as such:

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

Costco Wholesale has an F-score of 5 indicating the company's financial situation is typical for a stable company.

NAS:COST' s Piotroski F-Score Range Over the Past 10 Years
Min: 1   Max: 8
Current: 5

1
8

During the past 13 years, the highest Piotroski F-Score of Costco Wholesale was 8. The lowest was 1. And the median was 6.


Costco Wholesale Piotroski F-Score Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

* Premium members only.

Costco Wholesale Annual Data
Aug10 Aug11 Aug12 Aug13 Aug14 Aug15 Aug16 Aug17 Aug18 Aug19
Piotroski F-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 6.00 7.00 6.00 7.00 5.00

Costco Wholesale Quarterly Data
Nov14 Feb15 May15 Aug15 Nov15 Feb16 May16 Aug16 Nov16 Feb17 May17 Aug17 Nov17 Feb18 May18 Aug18 Nov18 Feb19 May19 Aug19
Piotroski F-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 7.00 7.00 5.00 5.00 5.00

Competitive Comparison
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap.


Costco Wholesale Piotroski F-Score Distribution

* The bar in red indicates where Costco Wholesale's Piotroski F-Score falls into.


How is the Piotroski F-Score calculated?

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Aug19) TTM:Last Year (Aug18) TTM:
Net Income was 767 + 889 + 906 + 1097 = $3,659 Mil.
Cash Flow from Operations was 2177 + -219 + 2105 + 2293 = $6,356 Mil.
Revenue was 35069 + 35396 + 34740 + 47498 = $152,703 Mil.
Gross Profit was 4446 + 4676 + 4507 + 6188 = $19,817 Mil.
Average Total Assets from the begining of this year (Aug18)
to the end of this year (Aug19) was
(40830 + 43814 + 42799 + 43752 + 45400) / 5 = $43319 Mil.
Total Assets at the begining of this year (Aug18) was $40,830 Mil.
Long-Term Debt & Capital Lease Obligation was $5,124 Mil.
Total Current Assets was $23,485 Mil.
Total Current Liabilities was $23,237 Mil.
Net Income was 640 + 701 + 750 + 1043 = $3,134 Mil.

Revenue was 31809 + 32995 + 32361 + 44411 = $141,576 Mil.
Gross Profit was 4192 + 4262 + 4230 + 5740 = $18,424 Mil.
Average Net Income from the begining of last year (Aug17)
to the end of last year (Aug18) was
(36347 + 39378 + 38703 + 39605 + 40830) / 5 = $38972.6 Mil.
Total Assets at the begining of last year (Aug17) was $36,347 Mil.
Long-Term Debt & Capital Lease Obligation was $6,487 Mil.
Total Current Assets was $20,289 Mil.
Total Current Liabilities was $19,926 Mil.

Profitability

Question 1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by Total Assets at the beginning of the year.

Score 1 if positive, 0 if negative.

Costco Wholesale's current Net Income (TTM) was 3,659. ==> Positive ==> Score 1.

Question 2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by Total Assets at the beginning of the year.

Score 1 if positive, 0 if negative.

Costco Wholesale's current Cash Flow from Operations (TTM) was 6,356. ==> Positive ==> Score 1.

Question 3. Change in Return on Assets

Compare this year's return on assets (1) to last year's return on assets.

Score 1 if it's higher, 0 if it's lower.

ROA (This Year)=Net Income/Total Assets(Aug18)
=3659/40830
=0.08961548

ROA (Last Year)=Net Income/Total Assets(Aug17)
=3134/36347
=0.08622445

Costco Wholesale's return on assets of this year was 0.08961548. Costco Wholesale's return on assets of last year was 0.08622445. ==> This year is higher. ==> Score 1.

Question 4. Quality of Earnings (Accrual)

Compare Cash flow return on assets (2) to return on assets (1)

Score 1 if CFROA > ROA, 0 if CFROA <= ROA.

Costco Wholesale's current Net Income (TTM) was 3,659. Costco Wholesale's current Cash Flow from Operations (TTM) was 6,356. ==> 6,356 > 3,659 ==> CFROA > ROA ==> Score 1.

Funding

Question 5. Change in Gearing or Leverage

Compare this year's gearing (long-term debt divided by average total assets) to last year's gearing.

Score 0 if this year's gearing is higher, 1 otherwise.

Gearing (This Year: Aug19)=Long-Term Debt & Capital Lease Obligation/Total Assetsfrom Aug18 to Aug19
=5124/43319
=0.11828528

Gearing (Last Year: Aug18)=Long-Term Debt & Capital Lease Obligation/Total Assetsfrom Aug17 to Aug18
=6487/38972.6
=0.16645028

Costco Wholesale's gearing of this year was 0.11828528. Costco Wholesale's gearing of last year was 0.16645028. ==> This year is lower or equal to last year. ==> Score 1.

Question 6. Change in Working Capital (Liquidity)

Compare this year's current ratio (current assets divided by current liabilities) to last year's current ratio.

Score 1 if this year's current ratio is higher, 0 if it's lower

Current Ratio (This Year: Aug19)=Total Current Assets/Total Current Liabilities
=23485/23237
=1.01067263

Current Ratio (Last Year: Aug18)=Total Current Assets/Total Current Liabilities
=20289/19926
=1.0182174

Costco Wholesale's current ratio of this year was 1.01067263. Costco Wholesale's current ratio of last year was 1.0182174. ==> Last year's current ratio is higher ==> Score 0.

Question 7. Change in Shares in Issue

Compare the number of shares in issue this year, to the number in issue last year.

Score 0 if there is larger number of shares in issue this year, 1 otherwise.

Costco Wholesale's number of shares in issue this year was 444. Costco Wholesale's number of shares in issue last year was 443.2. ==> There is larger number of shares in issue this year. ==> Score 0.

Efficiency

Question 8. Change in Gross Margin

Compare this year's gross margin (Gross Profit divided by sales) to last year's.

Score 1 if this year's gross margin is higher, 0 if it's lower.

Gross Margin (This Year: TTM)=Gross Profit/Revenue
=19817/152703
=0.12977479

Gross Margin (Last Year: TTM)=Gross Profit/Revenue
=18424/141576
=0.13013505

Costco Wholesale's gross margin of this year was 0.12977479. Costco Wholesale's gross margin of last year was 0.13013505. ==> Last year's gross margin is higher ==> Score 0.

Question 9. Change in asset turnover

Compare this year's asset turnover (total sales for the year divided by total assets at the beginning of the year) to last year's asset turnover ratio.

Score 1 if this year's asset turnover ratio is higher, 0 if it's lower

Asset Turnover (This Year)=Revenue/Total Assets at the Beginning of This Year (Aug18)
=152703/40830
=3.73997061

Asset Turnover (Last Year)=Revenue/Total Assets at the Beginning of Last Year (Aug17)
=141576/36347
=3.89512202

Costco Wholesale's asset turnover of this year was 3.73997061. Costco Wholesale's asset turnover of last year was 3.89512202. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score= Que. 1+ Que. 2+ Que. 3+Que. 4+Que. 5+Que. 6+Que. 7+Que. 8+Que. 9
=1+1+1+1+1+0+0+0+0
=5

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

Costco Wholesale has an F-score of 5 indicating the company's financial situation is typical for a stable company.

Costco Wholesale  (NAS:COST) Piotroski F-Score Explanation

The developer of the system is Joseph D. Piotroski is relatively unknown accounting professor who shuns publicity and rarely gives interviews.

He graduated from the University of Illinois with a B.S. in accounting in 1989, received an M.B.A. from Indiana University in 1994. Five years later, in 1999, after earning a Ph.D. in accounting from the University of Michigan, he became an associate professor of accounting at the University of Chicago.

In 2000, he wrote a research paper called "Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers" (pdf).

He wanted to see if he can develop a system (using a simple nine-point scoring system) that can increase the returns of a strategy of investing in low price to book (referred to in the paper as high book to market) value companies.

What he found was something that exceeded his most optimistic expectations.

Buying only those companies that scored highest (8 or 9) on his nine-point scale, or F-Score as he called it, over the 20 year period from 1976 to 1996 led to an average out-performance over the market of 13.4%.

Even more impressive were the results of a strategy of investing in the highest F-Score companies (8 or 9) and shorting companies with the lowest F-Score (0 or 1).

Over the same period from 1976 to 1996 (20 years) this strategy led to an average yearly return of 23%, substantially outperforming the average S&P 500 index return of 15.83% over the same period.


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