Costco Wholesale (BSP:COWC34) ROC % : 15.63% (As of Nov. 2024)

View and export this data going back to 2016. Start your Free Trial

What is Costco Wholesale ROC %?

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 Nov. 2024 was 15.63%.

As of today (2024-12-13), Costco Wholesale's WACC % is 10.67%. Costco Wholesale's ROC % is 16.01% (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 ROC % Historical Data

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.

* Premium members only.

Costco Wholesale ROC % Chart

Costco Wholesale Annual Data

Trend

Aug15

Aug16

Aug17

Aug18

Aug19

Aug20

Aug21

Aug22

Aug23

Aug24

ROC %

Get a 7-Day Free Trial

15.08

14.23

15.22

14.32

17.09

Costco Wholesale Quarterly Data
	Feb20	May20	Aug20	Nov20	Feb21	May21	Aug21	Nov21	Feb22	May22	Aug22	Nov22	Feb23	May23	Aug23	Nov23	Feb24	May24	Aug24	Nov24
ROC %	Get a 7-Day Free Trial															13.89	14.75	14.83	21.52	15.63

Costco Wholesale ROC % Calculation

Costco Wholesale's annualized Return on Capital (ROC %) for the fiscal year that ended in Aug. 2024 is calculated as:

	ROC % (A: Aug. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Aug. 2023 )	+	Invested Capital (A: Aug. 2024 ))	/ count )
=	51547.534 * ( 1 - 24.36% )	/	( (209707.645	+	246489.929)	/ 2 )
=	38990.5547176	/	228098.787
=	17.09 %

where

	Invested Capital		(A: Aug. 2023 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	338153.393	-	117192.593	-	( 74664.881	-	max(0, 164597	-	175850.155	+	74664.881	))
=	209707.645

	Invested Capital		(A: Aug. 2024 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	387680.763	-	147952.805	-	( 61868.145	-	max(0, 196885.489	-	190123.518	+	61868.145	))
=	246489.929

Costco Wholesale's annualized Return on Capital (ROC %) for the quarter that ended in Nov. 2024 is calculated as:

	ROC % (Q: Nov. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Aug. 2024 )	+	Invested Capital (Q: Nov. 2024 ))	/ count )
=	50912.944 * ( 1 - 22.03% )	/	( (246489.929	+	261577.994)	/ 2 )
=	39696.8224368	/	254033.9615
=	15.63 %

where

	Invested Capital		(Q: Aug. 2024 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	387680.763	-	147952.805	-	( 61868.145	-	max(0, 196885.489	-	190123.518	+	61868.145	))
=	246489.929

	Invested Capital		(Q: Nov. 2024 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	425352.595	-	168214.414	-	( 68550.475	-	max(0, 221926.873	-	217487.06	+	68550.475	))
=	261577.994

Note: The Operating Income data used here is four times the quarterly (Nov. 2024) data.

Costco Wholesale (BSP:COWC34) 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 10.67%. Costco Wholesale's ROC % is 16.01% (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

Thank you for viewing the detailed overview of Costco Wholesale's ROC % provided by GuruFocus.com. Please click on the following links to see related term pages.

Costco Wholesale Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Defensive » Retail - Defensive » Costco Wholesale Corp (BSP:COWC34) » Definitions » ROC %

Comparable Companies

Traded in Other Exchanges

COST:USA COST:Peru COST:Mexico 1COST:Italy 0I47:UK CTO0:Germany CTO:Germany CTO:Germany CTO:Germany COST:Chile COST:Canada COST:Austria COST:Argentina

Address

999 Lake Drive, Issaquah, WA, USA, 98027

Website

https://www.costco.com

Costco operates a membership-based, no-frills retail model, predicated on offering a select product assortment in bulk quantities at bargain prices. The firm avoids maintaining costly product displays by keeping inventory on pallets and limits distribution expenses by storing its inventory at point of sale in the warehouse. Given Costco's frugal cost structure, the firm is able to price its merchandise below competing retailers, driving high sales volume per warehouse and allowing the retailer to generate strong profits on thin margins. Costco operates over 600 warehouses in the United States and boasts over 60% market share in the domestic warehouse club industry. Internationally, Costco operates another 270 warehouses, primarily in markets such as Canada, Mexico, Japan, and the UK.

Costco Wholesale Headlines

No Headlines