Techquity
Technology Investor, Fundamental Research
Costco stock cannot be expected to make major gains soon at 40x earnings with only low double-digit growth. The company keeps executing well, yet the stock has been flat over the last two years. x.comÂ
Costco is an amazing company, but at roughly 40x forward earnings its stock is pricing in a lot of perfection. x.comÂ
Costco is the preferred hedge against OpenAI's much higher valuation relative to revenue. Costco's cited $441B valuation comes with $275B revenue, versus OpenAI's $1.4T valuation and $50B revenue. x.comÂ
Costco's premium multiple looks unsustainable, at 40 times next-twelve-month earnings with EPS growing only about 10%. Stocks with PEG ratios like that are not worth owning, as multiple cuts at former compounders such as FICO and Intuitive Surgical showed. x.com x.comÂ
Costco is expensive against its earnings, at 46x trailing and 37x next year's earnings versus the 18x its industry usually gets. At 18x next year's $24.95 EPS, give or take 12%, fair value is about $395-503, leaving the $922.81 price 83% above the high end. This is a valuation screen only, with no fundamental work. x.comÂ
Costco looks like a runner in the making after consolidating for over 70 days, backed by strong membership renewal rates and a dividend increase. The weekly 21 EMA has proven a key pivot, and a move above 1,028 would confirm the breakout. x.com x.comÂ
Costco is hard to justify at more than 40 times forward earnings while earnings grow only in the low teens. It behaves more like a sticky, mature subscription business than a traditional retailer, but that does not support the multiple. x.comÂ
Costco's slow growth in a finite market does not justify 30x earnings. It is a good model, but new members joining to buy in bulk to save money is not the strength bulls think it is. x.comÂ
Costco is a wonderful execution story whose business only gets better through consumer pain. Its Kirkland brand is more valuable than 90% of consumer brands today. The stock has been too expensive this cycle, and not owning it in size was a mistake; it is worth owning, though the right entry level is unclear. Sysco's moves illustrate the deeper transformation underway. x.comÂ
Costco and Walmart's valuations have diverged from most US food and beverage stocks. Most of the group trades near 20-year valuation lows, while these two have entered a mini-bubble. x.comÂ