Is Costco stock overvalued? (2024)

Is Costco stock overvalued?

Key Points. Stock valuations can be subjective, but shares of Costco appear to be objectively overvalued. The retail giant has a great business model that has delighted both customers and shareholders. But BJ's Wholesale Club offers investors the same model -- and at a more reasonable valuation.

Is Costco stock a good buy right now?

You can tell just by a glance at its share price chart that Wall Street loves Costco Wholesale (NASDAQ: COST) right now. The warehouse retailer is trading near all-time highs, having jumped over 50% since early 2023. That's a better performance than many popular tech stocks have managed during this time.

Why is Costco valued so high?

It has been a hotter buy than all those other popular tech stocks. The secret behind Costco's success isn't some flashy new artificial intelligence chatbot or cutting-edge technology. Instead, the company's strong brand, customer loyalty, and solid results have made it a top growth stock for many investors.

Why is Costco stock dropping so much?

Shares of membership-only discount retailer Costco (NASDAQ:COST) fell 7.7% in the afternoon session after the company reported fourth-quarter results with revenue falling short of analysts' expectations. Free cash flow also underwhelmed during the quarter with the company recording a significant amount of cash burn.

What is the fair value of Costco?

As of 2024-03-23, the Fair Value of Costco Wholesale Corp (COST) is 231.66 USD. This value is based on the Peter Lynch's Fair Value formula. With the current market price of 734.8 USD, the upside of Costco Wholesale Corp is -68.5%.

Will Costco stock reach $1,000?

But I believe that Costco's P/E ratio could actually contract because of how expensive it is right now, and this creates downside risk for investors. Don't expect the $1,000 mark to be met in 2024. And for investors who are drawn to the business, it's best to practice patience and wait for a better valuation.

Why is Costco a strong buy?

It has a differentiated operating model that breeds loyalty and high sales and is resilient during challenging times. Some investors think that Costco stock is too expensive to buy right now, and valuation should certainly be a factor in your investing decisions.

How safe is Costco stock?

With Costco stock trading at a 50% premium to its long-term average valuation, I believe that it is easily overvalued today for those looking to start a position. Therefore, I'd say that there's no margin of safety with Costco stock.

Is Costco a better stock than the spy?

While Costco has far outperformed the S&P 500 over the past 30 years by a margin of over 30x, it appears overvalued by 4.1% using a discounted cash flow forecast analysis. For that reason, the S&P 500 is likely the better bet for investors over the short-to-medium term.

What will Costco stock be worth in 10 years?

Costco stock price stood at $734.80

According to the latest long-term forecast, Costco price will hit $1000 by the end of 2024 and then $1100 by the middle of 2025. Costco will rise to $1300 within the year of 2026, $1500 in 2027, $1700 in 2028, $1800 in 2029, $2000 in 2031 and $2500 in 2035.

What is the highest Costco stock has ever been?

Historical daily share price chart and data for Costco since 1986 adjusted for splits and dividends. The latest closing stock price for Costco as of March 22, 2024 is 734.80. The all-time high Costco stock closing price was 785.59 on March 07, 2024.

Who has the most shares in Costco?

Largest shareholders include Vanguard Group Inc, BlackRock Inc., State Street Corp, VTSMX - Vanguard Total Stock Market Index Fund Investor Shares, VFINX - Vanguard 500 Index Fund Investor Shares, Fmr Llc, Morgan Stanley, Geode Capital Management, Llc, Invesco Qqq Trust, Series 1, and Bank Of America Corp /de/ .

Who has the most stock in Costco?

The top individual insider shareholders of Costco are Craig Jelinek, Charles Munger, and Patrick Callans, and the top institutional shareholders are Vanguard Group Inc., BlackRock Inc., and State Street Corp.

Is Costco financially healthy?

With a balance sheet considered best-in-class, showing significant net cash even after substantial dividend payments, Costco stands out with solid financial health. The outlook for the company remains positive with raised earnings estimates and a new, higher price target, reinforcing the Buy rating.

Does Costco value their employees?

We take care of our employees.

Costco's success depends on the well-being of employees within all areas of our business. Our operational practices, benefits, and paid time-off policies acknowledge and reward employees for their continued contribution to our culture and success.

Does Costco value its employees?

Since our founding, Costco has operated under the guiding principle of doing the right thing – for our members, our employees, our suppliers, our communities, and the environment. We understand that when we do the right thing, good things happen.

Would Costco stock split?

Why Costco probably won't do a split this year. If Costco were going to do a stock split, it probably would done so in 2022 along with the many other big-name stocks that initiated splits, including Amazon, Alphabet, and Tesla.

What is the future of Costco?

Future Growth

Costco Wholesale is forecast to grow earnings and revenue by 7.4% and 6.3% per annum respectively. EPS is expected to grow by 9.6% per annum. Return on equity is forecast to be 25.8% in 3 years.

What will Costco stock be worth in 2030?

Why should you invest in Costco stocks?

Costco's stock isn't just near its 52-week high, it's also at all-time highs. Costco's business has experienced significant growth since the start of the pandemic -- it's a go-to retailer for many customers, so it is to be expected that its value will go up.

Where does Costco make the most money?

Key Takeaways. Costco makes some of its profits from its merchandise, but the bulk of its profits come from membership dues. Only members can shop at Costco. The membership business model allows Costco to undersell the competition by offering products in bulk at lower prices to ensure customer loyalty.

Why are Costco employees so happy?

Both full-time and part-time workers at the retailer have access to benefits typically only enjoyed by full-time salaried employees higher up at similar stores. These readily available perks could be the reason behind Costco's long-running high score on Glassdoor, a website meant to rank employee satisfaction.

What are the pros and cons of Costco stock?

The retailer seems like an obvious buy due to its impressive competitive advantages and track record for market-share growth through a wide range of selling environments. But there are drawbacks to this stock, too, including its relatively low profit margin, modest dividend payment, and high price.

How much debt does Costco stock have?

Total debt on the balance sheet as of November 2023 : $9.34 B. According to Costco's latest financial reports the company's total debt is $9.34 B. A company's total debt is the sum of all current and non-current debts.

Is AMZN a buy right now?

The highest analyst price target is $230.00 ,the lowest forecast is $175.00. The average price target represents 17.17% Increase from the current price of $178.87. Amazon's analyst rating consensus is a Strong Buy. This is based on the ratings of 41 Wall Streets Analysts.