Costco Wholesale (COST) shares have hardly budged over the past week, despite broader market swings. Investors keeping an eye on Costco’s track record may find it interesting to see how the stock’s recent moves compare with its longer-term performance.
Even though Costco’s share price has seen only modest movement lately, the real story is in its remarkable long-term run. While the 1-year total shareholder return sits at 4.73%, it is the impressive 92% three-year and 169% five-year total returns that really underscore investors’ confidence and Costco’s ability to deliver steady growth over time.
With Costco’s shares climbing steadily for years, current valuations raise the debate: is there more upside for patient investors, or has the market already factored in all of Costco’s potential growth?
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Most Popular Narrative: 12.9% Undervalued
Costco’s narrative fair value sits notably above its recent closing price, signaling a gap that turns many heads. The details fueling this perspective are hard to ignore.
Costco plans to continue expanding its warehouse locations, with 28 new openings planned for fiscal year 2025. This expansion is likely to increase membership and sales volume, driving revenue growth.
Curious what’s powering the narrative behind that lofty valuation? It’s a mix of bold future sales projections, ambitious expansion, and profit margin improvements. Find out which aggressive assumptions and numbers analysts believe will justify this premium price. What may seem out of reach now could be the new normal if their growth story plays out.
However, foreign exchange fluctuations and rising labor costs could pressure Costco’s margins and create uncertainty around the optimistic outlook for long-term growth.
While analyst narratives paint Costco as undervalued, the company’s price-to-earnings ratio is much higher than industry norms. At 50.6x, Costco trades significantly above its industry average of 20.8x and peer average of 22.4x and also exceeds its own fair ratio of 29.4x. This steep premium suggests that much of Costco’s growth story could already be reflected in the shares, raising questions about how much room is left for upside.
If you see the story differently or would rather dig into the numbers yourself, you can quickly shape your own take in just a few minutes with Do it your way.
A great starting point for your Costco Wholesale research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data
and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your
financial situation. We aim to bring you long-term focused analysis driven by fundamental data.
Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Simply Wall St has no position in any stocks mentioned.
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Engages in the operation of membership warehouses in the United States, Puerto Rico, Canada, Mexico, Japan, the United Kingdom, Korea, Australia, Taiwan, China, Spain, France, Iceland, New Zealand, and Sweden.
