Balance sheet analysis
Costco Wholesale’s total assets were $69 billion and $64.17 billion at September 3, 2023, and August 28, 2022, respectively.
Property and equipment, net were $26.7 billion at September 3, 2023, accounting for 38.7% of total assets.
Total current assets were $35.9 billion as of September 3, 2023, constituting 52% of total assets.
Cash and cash equivalents were $13.7 billion at September 3, 2023, consisting of 19.9% of total assets.
Short-term investments were $1.53 billion as of September 3, 2023, making up 2.2% of total assets.
Total current liabilities were $33.6 billion at September 3, 2023.
The current ratio was 1.07 times for fiscal 2023.
Total liabilities were $44 billion at September 3, 2023.
The debt ratio was 63.8% for fiscal 2023.
Costco Wholesale’s balance sheet is very healthy.
Profitability analysis
Total revenues were $242.3 billion, $227 billion and $196 billion in fiscal 2023, 2022 and 2021, respectively.
Total revenues in fiscal 2023 were up 6.7% year-on-year.
Total revenues in fiscal 2022 were up 15.8% year-on-year.
Merchandises cost was $212.6 billion, $199.4 billion and $170.7 billion in fiscal 2023, 2022 and 2021, respectively.
Gross profit margin was 12.3%, 12.2% and 13% in fiscal 2023, 2022 and 2021, respectively.
Net income attributable to Costco was $6.3 billion, $5.84 billion and $5 billion in fiscal 2023, 2022 and 2021, respectively.
Net profit margin was 2.85%, 2.6% and 2.6% in fiscal 2023, 2022 and 2021, respectively.
Cash flow analysis
Net cash provided by operating activities was $11 billion, $7.4 billion and $9 billion in fiscal 2023, 2022 and 2021, respectively.
As you could see, Costco Wholesale’s cash flow is very strong, which show that the quality of earnings is very high.
When you see the amount of capital expenditure, you would feel a little disappointed.
Additions to property and equipment were $4.3 billion, $3.9 billion and $3.6 billion in fiscal 2023, 2022 and 2021, respectively.
The free cash flow was $6.7 billion, $3.5 billion and $5.4 billion in fiscal 2023, 2022 and 2021, respectively.
Repurchases of common stock were $676 million, $439 million and $496 million in fiscal 2023, 2022 and 2021, respectively.
Cash dividends payments were $1.25 billion, $1.5 billion and $5.75 billion in fiscal 2023, 2022 and 2021, respectively.
Costco Wholesale released quarterly report for quarter ending February 18, 2024.
Total revenue was $116.2 billion and $110 billion in 24 weeks ended February 18, 2024, and in 24 weeks ended February 12, 2023, respectively.
The increase in 24 weeks ended February 18, 2024 , was 5.64% year-on-year.
Net income was $3.33 billion and $2.83 billion in 24 weeks ended February 18, 2024, and in 24 weeks ended February 12, 2023, respectively.
Net cash flow provided by operating activities was $5.38 billion and $5.8 billion in 24 weeks ended February 18, 2024, and in 24 weeks ended February 12, 2023, respectively.
Conclusion
Costco Wholesale’s cash flow is very strong, but a lot of cash flow is offset by capital expenditure.
Free cash flow is very important.
Actually, the amount of cash returned to shareholders should not have been more than the amount of free cash flow.
Costco wholesale’s stock price is $722.9 billion per share, which is equivalent to $320.61 billion in market capitalization.
We reckon that the company’s stock price is overvalued, and the reasonable valuation is about $80 billion to $100 billion.
Disclaimer: The content is for reference only and does not constitute investment advice.
Introduction
Costco Wholesale Corporation and its subsidiaries (Costco or the Company) began operations in 1983, in Seattle, Washington. We are principally engaged in the operation of membership warehouses in the United States (U.S.) and Puerto Rico, Canada, Mexico, Japan, the United Kingdom (U.K.), Korea, Australia, Taiwan, China, Spain, France, Iceland, New Zealand, and Sweden. Costco operated 861, 838, and 815 warehouses worldwide at September 3, 2023, August 28, 2022, and August 29, 2021. The Company operates e-commerce websites in the U.S., Canada, Mexico, the U.K., Korea, Taiwan, Japan, and Australia. Our common stock trades on the NASDAQ Global Select Market, under the symbol “COST.”
