Contrasting Costco Wholesale (COST) and Its Competitors

Costco Wholesale (NASDAQ: COST) is one of 12 public companies in the “Variety stores” industry, but how does it weigh in compared to its rivals? We will compare Costco Wholesale to related businesses based on the strength of its institutional ownership, earnings, profitability, valuation, dividends, analyst recommendations and risk.

Volatility and Risk

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Costco Wholesale has a beta of 0.96, suggesting that its share price is 4% less volatile than the S&P 500. Comparatively, Costco Wholesale’s rivals have a beta of 0.89, suggesting that their average share price is 11% 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 2.18% 24.74% 7.37%
Costco Wholesale Competitors 3.76% 15.00% 6.64%

Earnings & Valuation

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

Gross Revenue Net Income Price/Earnings Ratio
Costco Wholesale $129.03 billion $2.68 billion 33.26
Costco Wholesale Competitors $65.63 billion $1.74 billion 21.78

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 and Insider Ownership

73.0% of Costco Wholesale shares are held by institutional investors. Comparatively, 76.5% of shares of all “Variety stores” companies are held by institutional investors. 0.7% of Costco Wholesale shares are held by company insiders. Comparatively, 13.9% of shares of all “Variety stores” companies are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Dividends

Costco Wholesale pays an annual dividend of $2.00 per share and has a dividend yield of 1.0%. Costco Wholesale pays out 34.4% of its earnings in the form of a dividend. As a group, “Variety stores” companies pay a dividend yield of 1.6% and pay out 36.6% of their earnings in the form of a dividend. Costco Wholesale has raised its dividend for 14 consecutive years.

Analyst Ratings

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Costco Wholesale 0 6 21 0 2.78
Costco Wholesale Competitors 163 1266 1707 91 2.53

Costco Wholesale currently has a consensus target price of $192.52, suggesting a potential downside of 0.54%. As a group, “Variety stores” companies have a potential upside of 5.35%. Given Costco Wholesale’s rivals higher possible upside, analysts plainly believe Costco Wholesale has less favorable growth aspects than its rivals.

Summary

Costco Wholesale beats its rivals on 9 of the 15 factors compared.

About Costco Wholesale

Costco Wholesale Corporation is engaged in the operation of membership warehouses in the United States and Puerto Rico, Canada, the United Kingdom, Mexico, Japan, Australia, Spain, and through its subsidiaries in Taiwan and Korea. As of August 28, 2016, the Company operated 715 warehouses across the world. The Company’s average warehouse space is approximately 144,000 square feet. The Company’s warehouses on average operate on a seven-day, 70-hour week. The Company offers merchandise in various categories, which include foods (including dry foods, packaged foods and groceries); sundries (including snack foods, candy, alcoholic and nonalcoholic beverages, and cleaning supplies); hardlines (including appliances, electronics, health and beauty aids, hardware, and garden and patio); fresh foods (including meat, produce, deli and bakery); softlines (including apparel and small appliances), and other (including gas stations and pharmacy).

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