Analyzing Costco Wholesale (COST) and Its Rivals

Costco Wholesale (NASDAQ:COST) is one of 149 public companies in the “Consumer Staples Distribution & Retail” industry, but how does it contrast to its rivals? We will compare Costco Wholesale to similar businesses based on the strength of its institutional ownership, earnings, analyst recommendations, valuation, dividends, profitability and risk.

Risk and Volatility

Costco Wholesale has a beta of 0.88, indicating that its stock price is 12% less volatile than the S&P 500. Comparatively, Costco Wholesale’s rivals have a beta of 0.43, indicating that their average stock price is 57% less volatile than the S&P 500.

Profitability

This table compares Costco Wholesale and its rivals’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Costco Wholesale	3.04%	27.60%	10.63%
Costco Wholesale Competitors	-25.68%	1.93%	2.63%

Analyst Ratings

This is a summary of current ratings and price targets for Costco Wholesale and its rivals, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Costco Wholesale	1	8	24	1	2.74
Costco Wholesale Competitors	2240	8261	10030	459	2.41

Costco Wholesale presently has a consensus target price of $1,086.19, suggesting a potential upside of 7.30%. As a group, “Consumer Staples Distribution & Retail” companies have a potential upside of 66.45%. Given Costco Wholesale’s rivals higher possible upside, analysts clearly believe Costco Wholesale has less favorable growth aspects than its rivals.

Dividends

Costco Wholesale pays an annual dividend of $5.88 per share and has a dividend yield of 0.6%. Costco Wholesale pays out 28.3% of its earnings in the form of a dividend. As a group, “Consumer Staples Distribution & Retail” companies pay a dividend yield of 3.8% and pay out 36.7% of their earnings in the form of a dividend. Costco Wholesale has increased its dividend for 22 consecutive years.

Valuation and Earnings

This table compares Costco Wholesale and its rivals gross revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Costco Wholesale	$303.15 billion	$9.23 billion	48.76
Costco Wholesale Competitors	$34.71 billion	$846.03 million	15.91

Costco Wholesale has higher revenue and earnings than its rivals. Costco Wholesale is trading at a higher price-to-earnings ratio than its rivals, indicating that it is currently more expensive than other companies in its industry.

Institutional & Insider Ownership

68.5% of Costco Wholesale shares are owned by institutional investors. Comparatively, 45.0% of shares of all “Consumer Staples Distribution & Retail” companies are owned by institutional investors. 0.1% of Costco Wholesale shares are owned by company insiders. Comparatively, 19.7% of shares of all “Consumer Staples Distribution & Retail” companies are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Summary

Costco Wholesale beats its rivals on 12 of the 15 factors compared.

About Costco Wholesale

Costco Wholesale Corporation, together with its subsidiaries, 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. The company offers branded and private-label products in a range of merchandise categories. It offers merchandise, such as sundries, dry groceries, candies, coolers, freezers, deli, liquor, and tobacco; appliances, electronics, health and beauty aids, hardware, garden and patio products, sporting goods, tires, toys and seasonal products, office supplies, automotive care products, postages, tickets, apparel, small appliances, furniture, domestics, housewares, special order kiosks, and jewelry; and meat, produce, service deli, and bakery products. The company also operates gasoline, pharmacies, optical, food courts, hearing-aid centers, and tire installation centers; and offers business delivery, travel, grocery, and various other services online. It also operates e-commerce websites. The company was formerly known as Costco Companies, Inc. and changed its name to Costco Wholesale Corporation in August 1999. Costco Wholesale Corporation was founded in 1976 and is based in Issaquah, Washington.