Costco Wholesale Corporation #COST is the world's largest self-service club-type warehouse chain. The company is one of the largest retailers in the world: 674 warehouse stores in different countries, including 474 in America.
For the period from March 1 to April 4, the company's revenue amounted to $ 18.21 billion (an increase of 17.6%). Like-for-like sales increased 16%.
Consumer traffic in international operations and in the US grew by 3.3% and 3%, respectively.
Analysts predict earnings per share in 2021 at $ 10.29. EPS forecast for Q3 was $ 2.23, below the consensus of $ 2.25.
Stable financial position of the company.
Historically strong store traffic and membership renewals are driving Costco's growth.
The company looks attractive due to its financial strength and high customer traffic. It may also outperform the market against the background of the opening of the economy.
Earnings vs Savings Rate: COST's forecast earnings growth (8.8% per year) is above the savings rate (2%).
Below Fair Value: COST ($372.2) is trading below our estimate of fair value ($531.31)
Significantly Below Fair Value: COST is trading below fair value by more than 20%.
Short Term Liabilities: COST's short term assets ($26.3B) do not cover its short term liabilities ($26.6B)
Long Term Liabilities: COST's short term assets ($26.3B) exceed its long term liabilities ($12.2B).
Debt Level: COST's debt to equity ratio (45.6%) is considered high.
Debt Coverage: COST's debt is well covered by operating cash flow (120%)
Interest Coverage: COST's interest payments on its debt are well covered by EBIT (54.3x coverage)
✅ Costco #COST
🎯 Target price - $ 410, upside potential + 10%
OTB Global Investments
13 May 2021