ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. Costco Wholesale's annualized return on capital (ROC %) for the quarter that ended in May. 2026 was 16.00%.
As of today (2026-06-24), Costco Wholesale's WACC % is 8.17%. Costco Wholesale's ROC % is 16.84% (calculated using TTM income statement data).
Costco Wholesale generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.
Costco Wholesale (NAS:COST) ROC % Explanation
ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.
There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.
Why is ROC % important?
Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.
As of today, Costco Wholesale's WACC % is 8.17%. Costco Wholesale's ROC % is 16.84% (calculated using TTM income statement data).
Costco Wholesale generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.
Be Aware
Like ROE % and ROA %, ROC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.
Costco Wholesale ROC % Related Terms
Costco Wholesale ROC % Historical Data
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The historical data trend for Costco Wholesale's ROC % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Note:
The Operating Income data used here is four times the quarterly (May. 2026) data.
The tax rate is limited to between 0% and 100%.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Costco Wholesale (COST) has a ROC % of 16.00% as of May. 2026. Return on capital is the ratio of current-period net income to average two-period capital. View historical data on Costco Wholesale and its competitors.
Is Costco Wholesale's ROC % too high?
Costco Wholesale's current ROC % is 16.00%. The Retail - Defensive industry median ROC % is 5.54. Costco Wholesale's value of 16.00% is 188.8% above this industry median. Overall, Costco Wholesale has a GF Score™ of 97/100 and is considered Fairly Valued, reflecting its overall financial health beyond just this single metric.
How does Costco Wholesale's ROC % compare to TGT and DG?
Costco Wholesale's ROC % of 16.00% can be compared against companies in the Retail - Defensive industry. The industry median ROC % is 5.54. Costco Wholesale's value of 16.00% is 188.8% above this benchmark. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good ROC % for a Retail - Defensive company?
The median ROC % among Retail - Defensive companies is 5.54, based on 309 companies in the industry. Companies in the top quartile (top 25%) have a ROC % significantly above this median, while those in the bottom quartile fall well below. However, ROC % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Costco Wholesale's current ROC % of 16.00% is 188.8% above the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high ROC % mean?
A high ROC % can signal that a stock is expensive relative to its fundamentals. Return on capital is the ratio of current-period net income to average two-period capital. View historical data on Costco Wholesale and its competitors. For the Retail - Defensive industry, the median ROC % is 5.54 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Costco Wholesale's current ROC % is 16.00%. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Costco Wholesale stock overvalued right now?
Based on GuruFocus' analysis, Costco Wholesale (COST) is currently considered Fairly Valued. The stock's GF Value™ is $1,014.93, compared to a current price of $960.97 — trading 5.3% below its estimated fair value. The current ROC % is 16.00% and 188.8% above the Retail - Defensive industry median of 5.54. Costco Wholesale's overall GF Score™ is 97/100 with 1 warning sign to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is ROC % calculated?
ROC % is calculated from a company's financial statements. For Costco Wholesale (COST), the current ROC % is 16.00% as of May. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Costco Wholesale (COST) Overvalued in 2026?
Based on GuruFocus' analysis, Costco Wholesale stock appears to be undervalued.
The current stock price of $960.97 is trading 5.3% below its estimated GF Value™ of $1,014.93.
GuruFocus considers Costco Wholesale to be Fairly Valued.
Key valuation signals for COST:
ROC %: 16.00%
GF Value™: $1,014.93 vs. price of $960.97 (5.3% below fair value)
Industry Position: 188.8% above the Retail - Defensive median
No single metric tells the full story. See the COST stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
Founded in 1983, Costco Wholesale now operates a global chain of membership-based warehouse clubs, delivering high-quality goods and services at consistently low prices. As of its most recent fiscal year, Costco operated approximately 910 warehouses, serving more than 80 million members across its three geographic segments: Costco US (approximately 73% of total revenue), Costco Canada (13%), and Costco International (14%).Costco's core value proposition—quality products at unbeatable prices—has yielded consistently strong member renewal rates (93% in the US and Canada and nearly 90% internationally). About 55% of Costco's fiscal 2025 revenue came from its grocery offerings, and another 25% from general merchandise.
97GF Score
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