USD 71.02 as of today(2019-10-15). Costco Wholesale Graham Number explanation, calculation, historical data and more" />Costco Wholesale Graham Number | COST - GuruFocus.com
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Costco Wholesale Graham Number

: USD 71.02 (As of Aug. 2019)
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Graham Number is a figure that measures a stock's fundamental value by taking into account the company's earnings per share and book value per share. The Graham number is the upper bound of the price range that a defensive investor should pay for the stock. According to the theory, any stock price below the Graham number is considered undervalued, and thus worth investing in.

As of today (2019-10-15), the stock price of Costco Wholesale is USD 297.52. Costco Wholesale's graham number for the quarter that ended in Aug. 2019 was USD 71.02. Therefore, Costco Wholesale's Price to Graham Number ratio for today is 4.19.

During the past 13 years, the highest Price to Graham Number ratio of Costco Wholesale was 5.06. The lowest was 0.00. And the median was 1.92.

Graham Number is a combination of asset valuation and earnings power valuation. It is a very conservative way of valuing a stock.


Costco Wholesale Graham Number 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
Graham Number Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 54.00 57.44 57.97 68.21 79.98

Costco Wholesale Quarterly Data
Feb15 May15 Aug15 Nov15 Feb16 May16 Aug16 Nov16 Feb17 May17 Aug17 Nov17 Feb18 May18 Aug18 Nov18 Feb19 Apr19 May19 Aug19
Graham Number 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 70.64 74.50 67.36 65.45 71.02

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 Graham Number Distribution

* The bar in red indicates where Costco Wholesale's Graham Number falls into.



Costco Wholesale Graham Number Calculation

Graham Number is a concept based on Ben Graham's conservative valuation of companies.

Costco Wholesale's Graham Number for the fiscal year that ended in Aug. 2019 is calculated as

Graham Number
=sqrt of (22.5* Tangible Book per Share *EPS without NRI)
=sqrt of (22.5*34.415*8.26)
=79.98

Costco Wholesale's Graham Number for the quarter that ended in Aug. 2019 is calculated as

Graham Number
=sqrt of (22.5*Tangible Book per Share*EPS without NRI (TTM))
=sqrt of (22.5*34.331*6.53)
=71.02

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


Costco Wholesale  (NAS:COST) Graham Number Explanation

Ben Graham actually did not publish a formula like this. But he wrote in The Intelligent Investor (1948 version) regarding to the criteria for purchases:

Current price should not be more than 15 times average earnings of the past three years.

Current price should not be more than 1.5 times the book value last reported. However, a multiplier of earnings below 15 could justify a correspondingly higher multiplier of assets. As a rule of thumb we suggest that the product of the multiplier times the ratio of price to book value should not exceed 22.5. (This figure corresponds to 15 times earnings and 1.5 times book value. It would admit an issue selling at only 9 times earnings and 2.5 times asset value, etc.)

Unlike valuation methods such as DCF or Discounted Earnings, the Graham number does not take growth into the valuation. Unlike the valuation methods based on book value alone, it takes into account the earnings power. Therefore, the Graham Number is a combination of asset valuation and earnings power valuation.

In general, the Graham number is a very conservative way of valuing a stock. It cannot be applied to companies with negative book values.

Costco Wholesale's Price to Graham number Ratio for today is calculated as

Price to Graham number=Share Price (Today)/Graham number (Q: Aug. 2019 )
=297.52/71.02
=4.19

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


Be Aware

Please keep these in mind:

1. Graham Number does not take growth into account. Therefore it underestimates the values of the companies that have good earnings growth. We feel that if the earnings per share grows more than 10% a year, Graham Number underestimates the value.
2. Graham Number punishes the companies that have temporarily low earnings. Therefore, an average of earnings makes more sense in the calculation of Graham Number.
3. Graham Numbers underestimates companies that are light with book.


Costco Wholesale Graham Number Related Terms

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