Benzinga - by Benzinga Insights, Benzinga Staff Writer.
In today's rapidly evolving and fiercely competitive business landscape, it is crucial for investors and industry analysts to conduct comprehensive company evaluations. In this article, we will undertake an in-depth industry comparison, assessing Costco Wholesale (NASDAQ:COST) alongside its primary competitors in the Consumer Staples Distribution & Retail industry. By meticulously examining crucial financial indicators, market positioning, and growth potential, we aim to provide valuable insights to investors and shed light on company's performance within the industry.
Costco Wholesale Background Costco operates a membership-based, no-frills retail model, predicated on offering a select product assortment in bulk quantities at bargain prices. The firm avoids maintaining costly product displays by keeping inventory on pallets and limits distribution expenses by storing its inventory at point of sale in the warehouse. Given Costco's frugal cost structure, the firm is able to price its merchandise below competing retailers, driving high sales volume per warehouse and allowing the retailer to generate strong profits on thin margins. Costco operates over 600 warehouses in the United States and boasts over 60% market share in the domestic warehouse club industry. Internationally, Costco operates another 270 warehouses, primarily in markets such as Canada, Mexico, Japan, and the UK.
CompanyP/EP/BP/SROEEBITDA (in billions)Gross Profit (in billions)Revenue Growth| Costco Wholesale Corp | 46.68 | 15.24 | 1.27 | 7.43% | $2.79 | $7.3 | 5.75% |
| Walmart Inc | 31.34 | 5.75 | 0.75 | 6.73% | $11.33 | $41.56 | 5.69% |
| Target Corp | 19.21 | 5.90 | 0.74 | 10.65% | $2.62 | $8.52 | 1.67% |
| Dollar General Corp | 21.13 | 5.19 | 0.91 | 6.09% | $0.8 | $2.91 | -3.38% |
| BJ's Wholesale Club Holdings Inc | 19.56 | 6.92 | 0.51 | 10.37% | $0.27 | $0.96 | 8.68% |
| Sendas Distribuidora SA | 26.10 | 4 | 0.28 | 6.63% | $1.42 | $3.07 | 8.35% |
| Pricesmart Inc | 22.49 | 2.34 | 0.56 | 3.42% | $0.08 | $0.2 | 10.59% |
| Almacenes Exito SA | 25.40 | 0.52 | 0.15 | 1.88% | $426.56 | $1373.83 | -12.61% |
| Average | 23.6 | 4.37 | 0.56 | 6.54% | $63.3 | $204.44 | 2.71% |
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.dividend-frequency { font-size: 12px; color: #6c757d; } When closely examining Costco Wholesale, the following trends emerge:
- Notably, the current Price to Earnings ratio for this stock, 46.68, is 1.98x above the industry norm, reflecting a higher valuation relative to the industry.
- The elevated Price to Book ratio of 15.24 relative to the industry average by 3.49x suggests company might be overvalued based on its book value.
- The stock's relatively high Price to Sales ratio of 1.27, surpassing the industry average by 2.27x, may indicate an aspect of overvaluation in terms of sales performance.
- The company has a higher Return on Equity (ROE) of 7.43%, which is 0.89% above the industry average. This suggests efficient use of equity to generate profits and demonstrates profitability and growth potential.
- Compared to its industry, the company has lower Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) of $2.79 Billion, which is 0.04x below the industry average, potentially indicating lower profitability or financial challenges.
- The company has lower gross profit of $7.3 Billion, which indicates 0.04x below the industry average. This potentially indicates lower revenue after accounting for production costs.
- The company is experiencing remarkable revenue growth, with a rate of 5.75%, outperforming the industry average of 2.71%.
The debt-to-equity (D/E) ratio provides insights into the proportion of debt a company has in relation to its equity and asset value.
Considering the debt-to-equity ratio in industry comparisons allows for a concise evaluation of a company's financial health and risk profile, aiding in informed decision-making.
When examining Costco Wholesale in comparison to its top 4 peers with respect to the Debt-to-Equity ratio, the following information becomes apparent:
- Costco Wholesale exhibits a stronger financial position compared to its top 4 peers in the sector, as indicated by its lower debt-to-equity ratio of 0.45.
- This suggests that the company has a more favorable balance between debt and equity, which can be seen as a positive aspect for investors.
This article was generated by Benzinga's automated content engine and reviewed by an editor.
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