COST
Costco Wholesale Corporation
$921.75
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Mild
·
Conviction
Overvalued
Trading 9.8% above fair value
You pay
$921.75
Bear
$691.22
Fair
$839.34
Bull
$987.46
Bear
$691.22
-25.0%
$18.21 × 32x P/E
Fair
$839.34
-8.9%
$18.21 × 38x P/E
Bull
$987.46
+7.1%
$18.21 × 45x P/E
Key Value Driver
Normalized P/E multiple (38x base case)
Implied Market Multiple
50.6x
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 $1102.23 from 58 analysts, using a 35% weight on analyst consensus. That produces an estimated intrinsic value of $839.34 per share.
Warnings
Wall Street's average price target is $1102.23 (from 58 analysts). Our estimate is 37% 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