COST
Costco Wholesale Corporation
$1,028.24
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Overvalued
Trading 23.5% above fair value
You pay
$1,028.24
Bear
$685.76
Fair
$832.71
Bull
$979.66
Bear
$685.76
-33.3%
$18.21 × 32x P/E
Fair
$832.71
-19.0%
$18.21 × 38x P/E
Bull
$979.66
-4.7%
$18.21 × 45x P/E
Key Value Driver
Normalized P/E multiple (38x base case)
Implied Market Multiple
56.5x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $1083.27 from 58 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $832.71 per share.
Warnings
Wall Street's average price target is $1083.27 (from 58 analysts). Our estimate is 36% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples