Costco Should Be Able to Stem the Competitive Tide That Is Roiling Retail, but Shares Seem Rich
We are lifting our valuation of wide-moat Costco to $213 per share from $192, reflecting strong second-quarter earnings, solid sales growth to date in the third-quarter, and the time value of money. We still expect mid-single-digit top-line growth against adjusted operating margins just above 3% over the decade ahead. Despite the increase, we see the shares as a bit rich.While we believe prevailing share prices assume a degree of perfection with which we are uncomfortable, we still see Costco a...
Costco Wholesale and its subsidiaries are principally engaged in the operation of membership warehouses based on the concept of providing its members low prices on a selection of nationally branded and private-label products. The company's merchandise are: food and sundries, which include dry foods, packaged foods, and groceries, snack foods, candy, alcoholic and nonalcoholic beverages, and cleaning supplies; hardlines, which include appliances, electronics, health and beauty aids, hardware, and garden and patio; fresh food, which include meat, produce, deli, and bakery; softlines, which include apparel and small appliances; and ancillary, which include gas stations and pharmacy businesses.
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Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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