Does Value Line rate this stock as a good long-term investment? State Yes or No and explain your conclusion in 1-2 paragraphs. (Use Value Line Investment Survey dated 07-26-2019).
COSTCO WHOLESALE NDQ-COST The 280.65 RETO 34.3 (Med 20) EL AME 2.01 TIMELINESS 2 Lowered 219 23.3 33.3 332 603 1988 136.9 168.1996 1986 1988 345. 7 0.9% VALUE AA 7 109. 0 126.1 146.8 1697 169.6 195.4 245 2 261.4 Target Price Range 2022 2023 2024 SAFETY 1 Raised 26/09 LEGENDS 180 "Cash Flowsh TECHNICAL 4 Lowered 1/26/19 ... Relative Price Strength Options: Yes BETA 85 (100 - Market) Shaded are indicates recession 2022-24 PROJECTIONS Price Ann'l Total Gain Return efund 305 1410 R 14.30 9,90 28.0 1.45 40% of sales reported membershi Insider Decisions SONDJFMAM to Buy D0000001 Options D20 0 0 0 0 0 0 0 to Sell 0 210 10 500 % TOT. RETURN 6/19 Institutional Decisions THIS VL ARITH 10701842911019209 Parcent to Buy 718 764 837 shares to Sai 58 700 642 73.9 Hd000312480 314025 313106 luunnililolillall 5 yr. 150.5 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 VALUE LINE PUB. LLC 22-24 93.00 103.98 112.04 130.12 148.53 167.59 163.88 179.80 204.75 229.30 240.72 257.36 265 32 271.34 295.11 323.09 347.50 374.20 Revenues per sh AD 451.90 2.43 2.86 3.12 3.50 4.05 4.48 4.25 6.69 7.05 7.90 8.24 9.00 10.43 11.50 12.25 "Cash Flow per sh 1.53 1.86 2.04 231 2.63 2.69 2.57 4.65 5.27 5.33 5.85 7.09 8.05 8.50 Earnings per sh 3 20 43 4955 .6168 1.17 1.33 1.51 1.70 1.90 214 2.40 2.65 Div'ds Decl'd per shC 3.30 14.33 16.48 18.80 19.78 19.73 21.25 22.98 2498 27.64 28.59 24,80 28.11 2424 27.61 24.65 29.21 35.05 40.20 Book Value per sh 51.00 457.48 462.64 47248 462 28 437.01 432.51 435.97 433.51 434.27 432.35 436.84 437.68 437.95 437.52 437.20 438.19 440.00 438.00 Common Shs Outstg 420.00 212 20.0 223 22.1 21.0 23.1 19.5 19.9 22.1 21.9 23.4 25.1 26.7 29.0 27.6 26.8 Bold Ngwres are Avg Ann' P/E Ratio 1.06 1.19 1.19 1.11 1.39 130 1.27 1.39 1.39 1.31 1.32 1.34 1.52 1.39 1.43 Value Line Relative P/E Ratio .5% 9% 10% 1.0% 9% 14% 13% 1.2% 1.2% 1.156 1.1% 1.1% 1.1% 1.2% 1.1% estimates An Anel Divd Yield 1.2% CAPITAL STRUCTURE as of 5/12/19 7144977946 88915 99137 106156 112640 116199 118719 129025 141576 152900 163900 Revenues (Smill) AD 194000 12.8% 12,8% 12.6% 12.4% 126% 12.6% 13.0% 13.3% 13.3% 13.0% 12.0% 12.0% Gross Margin D 12.0% LT Debt $4799 mill. LT Interest $145 mill. 3.6% 3.7% 3.7% 3.7% 3.8% 3.8% 4.1% 4.2% 4.2% 42% 4.2% 4.2% Operating Margin D 4.24% (25% of Cap'l) 527 540 592 608 634 663 686 715 741 762 785 810 Number of Stores 910 Leases, Uncapitalized Annual rentals $227 mill. 1124.2 1307.5 14620 1741.0 1977.0 2058.0 2334.0 2350.0 2564.0 3134.0 3565 3760 Net Profit (Smill) 4160 No Defined Benefit Pension Plan 36.7% 36.1% 35.3% 35.4% 34.5% 34.7% 34.4% 34.3% 35.7% 28.4% 26.0% 27.0% Income Tax Rate 27.0% 1.6% 1.7% 1.6% 1.8% 19% 1.8% 2.0% 2.0% 2.0% 22% 2.3% 2.3% Net Profit Margin 21% Pld Stock None 1056.0 1645.0 1656.0 1266.0 2583.0 3176.0 759.0 0357.0 178.0 363.0 415 675 Working Cap'l (Smill) 2100 Common Stock 439,789,186 shs. 2208.0 2141.0 1253.0 1381.0 4998.0 5090.0 4864.0 4061.0 6673.0 6487.0 4700 4650 Long-Term Debt ($mill) 4500 as of 5/29/19 10010 1082912002 12361 10833 12303 10617 12079 1077812799 15420 17600 Shr. Equity (Smill) 21425 9.6% 10.5% 11.4% 13.0% 128% 12.2% 15.5% 15.0% 15.2% 16.7% 17.5% 17.0% Return on Total Cap'l 15.0% 11.2% 12.1% 12.2% 14.1% 18.2% 16.7% 22.0% 19.5% 23.8% 24.5% 23.0% 21.5% Return on Shr. Equity 19.5% MARKET CAP: $123.4 billion (Large Cap) 8.3% 9.0% 8.9% 10.5% 13.5% 12.0% 15.7% 13.3% 16.1% 19.1% 16.0% 14.5% Retained to Com Eq 15.5% CURRENT POSITION 2017 2018 5/12/19 286 28% 287 26% 270% 27% 26% 28% 28% 28% 32% 33% 22% 30% 31% All Div'ds to Net Prof 30% SMILL.) Cash Assets 5779 7259 8167 BUSINESS: Costco Wholesale Corporation was formed by the houses to a restricted membership Food and sundries account for Receivables 1432 1669 1704 merger of Price Co. and Costco Wholesale in October 193. The Inventory (LIFO) 40% of sales Erolovs around 245.000 people. Offs & Dis own 9834 11304 11040 Other 1 0 company operates wholesale-membership warehouses in the U.S. less than 1.0% of common stock; Vanguard, B.1%; BlackRock, Current Assets 17317 20289 22285 (535 as of 5/12/19), Canada (100), Mexico (39). United Kingdom 6.4% (12/18 proxy). Chrmn: Jeffrey H. Brotman. Pres. & CEO: W. Accts Payable 9608 11237 11331 (28), Japan (28), Korea (16), Taiwan (13), Australia (11), Spain (2) Craig Jelinek. Inc.: Washington. Adds: 999 Lake Drive, Issaquah, Debt Due 86 Iceland (1) France (1). Sells merchandise directly from ware- Washington 98027. Tel.: 425-313-8100. Internet: www.costco.com. Other 7801 86899802 Current Liab. 17495 19926 22832 Costco Wholesale continues to thrive. U.S. stores, and is going to move to a little Adjusted earnings per share for the May under half over the next several months. ANNUAL RATES Past Past Est'd '16-'18 of change per sh) 10 Yrs 5 Yrs to 22.24 quarter rose 11% year over year. Net sales This should ultimately help save some Sales 7.0% 5.5% 8.0% jumped 7.4%, largely thanks to same store labor costs and offset wage increases. Else "Cash Flow" 8.5% 9.0% 7.0% sales increasing 5.5%. The average trans- where, the company is vertically integrat- Earnings 90% 90% 9.0% Dividerids 13.6% 13.0% 11.5% action amount grew 1.8% and traffic ad- ing by building chicken processing Book Value 3.0% - 9.0% vanced 3.7% worldwide. Although the lat facilities in Nebraska in order to more effi ter result moderated a bit from recent ciently satisfy demand for parts and its Fiscal QUARTERLY REVENUES $ mill.) AEE Full Year Nov.Per Feb.Per May Per Aug. Perl Year Fiscal levels, we think this reflects ordinary ebbs popular $5 rotisserie chickens. and flows. E-commerce sales were up Tariffs pose a moderate threat. The 2016 27220 28170 26769 36560 118719 2017 28099 29766 28860 42300 129025 19.5% excluding foreign exchange. The top company accelerated shipments before the 2018 31809 32995 32361 44411 141576 growth categories included electronics, 25% rate went into effect, and has also 2019 35069 35396 34740 47695 152900 health and beauty aids, furniture, small been looking at alternative country sourc- 2020 37470 38100 37400 50930 163900 appliances, automotive, and optical. ing. Still, there is a limited opportunity to Fiscal EARNINGS PER SHARE ABE Full Notably, we think a special dividend may conduct such tactics. Costco is also work- Fear Nov.Per Feb.Per May Per Aug. Perl FCAl be on the horizon, owing to the past timing ing with suppliers to lower costs and Year of such payments. 2016 1.09 1.24 1.24 1.765.33 reduced order commitments on certain 2017 1.171.17 1.40 2.09585 A number of initiatives are under items. In some cases, the tariffs are being 2018 1.45 1.59 1.70 2.36 7.09 way. Costco completed the rollout of six passed onto consumers. Management 2019 1.61 2.01 1.89 2.64 8.05 regional grocery distribution centers lo- claims it is hard to predict what the im- 2020 1.75 2.05 2.00 2.70 8.50 cated within existing supply chain depots. pact will be, but admitted "prices will go Cal. QUARTERLY DIVIDENDS PAID Too, buy online, pickup in-store lockers are up on things. The situation will get more Full endar Mar. 31 Jun 30 Sep.30 Dec.31 Year in 10 locations and will be added to 100 worrisome if List 4 is authorized, as it 2015 355 40 40 40 1.56 more before the holiday season. More basically incorporates every category in members have been using the Costco app. cluding electronics, apparel, and TVs. 2016 40 45 45 45 1.75 2017 45 50 50 50 1.95 thanks to new features such as push noti- These timely, high-quality shares are 2018 50 5 7 .57 57 2.21 fications for pharmacy orders. Costco is favorably ranked for Safety. 2019 57 .65 also testing self-checkout in a quarter of Kevin Downing July 26, 2019 (A) Fiscal year ends on Sunday nearest Aug. 13, (14). Next egs. report due early Oct. in 12/12, $5.00 in 2/15; $7.00 paid in 5/17. Company's Financial Strength 31st. Interim periods cover 12, 12, 12, and 16 (C) Divds historically paid in mid-Feb., mid-(D) Incl. membership fees. Stock's Price Stability weeks.B) Excludes nr gains (losses) 05 May, early Aug., and mid-Nov.-Divd reinvest (E) Totals may not sum due to rounding 15: '07, (264): '09 (98); 10 (10): 12, (80); ment plan avalable. Special div'd of $7.00 paid Earnings Predictability 2019 Value Line, Inc. All tichistess Factual material is obtained from unes beloved to be the and is provided without warranties of any kind THE PUBLISHER IS NOT RESPONSIBLE FOR ANY ERRORS OR OMISSIONS HEREIN This publikation is strictly for subscriber's own, non-commercial intama No Dari To subscribe call 1-800-VALUELINE of it may be reproduced, resold, stored or transmitted in any printed, electronic or other form, or used for generating or arketing any printed or electronic publication service or product. by buildpany is verticarcases. El aims it be, but a situation
