Costco Wholesale Corporation (COST): investment thesis checklist
What a value investor writing down why they own Costco Wholesale Corporation would be relying on, read from its filings: the figures that have carried the business, the lines a reader might set on them, and the published tests it meets today. A list to write against, not a view on the company.
1. The figures the case would rest on
- Return on invested capital: 34.1% in FY2026; between 24.1% and 34.1% over 8 filed years, median 29.7%. Does the thesis need it to stay inside that range?
- Return on equity: 25.8% in FY2026; between 21.9% and 31.2% over 10 filed years, median 25.4%. Does the thesis need it to stay inside that range?
- Free cash flow yield: 2.2% in FY2026; between 1.5% and 6.0% over 10 filed years, median 2.6%. Does the thesis need it to stay inside that range?
- EV to EBIT: 35.10x in FY2026; between 27.32x and 42.75x over 8 filed years, median 30.02x. Does the thesis need it to stay inside that range?
- Price to earnings: 45.54x in FY2026; between 26.03x and 53.89x over 10 filed years, median 39.29x. Does the thesis need it to stay inside that range?
- Gross margin: 12.8% in FY2026; between 10.8% and 13.3% over 10 filed years, median 12.8%. Does the thesis need it to stay inside that range?
- Operating margin: 3.9% in FY2026; between 3.1% and 3.9% over 10 filed years, median 3.4%. Does the thesis need it to stay inside that range?
- Net debt to EBITDA: -0.70x in FY2026; between -0.70x and 0.00x over 8 filed years, median -0.17x. Does the thesis need it to stay inside that range?
- Revenue growth, 5-year CAGR: 9.1% in FY2026; between 5.4% and 12.0% over 10 filed years, median 9.8%. Does the thesis need it to stay inside that range?
- Share count change: -0.1% in FY2026; between -0.1% and 0.3% over 10 filed years, median 0.1%. Does the thesis need it to stay inside that range?
2. What must stay true: guardrails a reader might set
Each line is drafted from Costco Wholesale Corporation's own current figure, never from a level we think a business should clear, and replayed over its filed years. They are a reader's to keep, edit or drop.
Debt to Equity stays at or below 0.35x
Today 0.28x. Replayed over 8 filed years, it would have broken in 5; most recently FY2024, at 0.42x (10-K, filed 2024-10-09).
Return on Invested Capital stays at or above 27.3%
Today 34.14%. This indicator depends on inputs (market price, multi-statement composites) whose history is not deep enough to re-derive it with the same formula as the live value, so no honest retro-test exists for it.
Dividend Rate stays at or above $5.82
Today $5.88. This indicator depends on inputs (market price, multi-statement composites) whose history is not deep enough to re-derive it with the same formula as the live value, so no honest retro-test exists for it.
3. What would break it
- A filed year in which debt to equity rose above 0.35x.
- A filed year in which return on invested capital fell below 27.3%.
- A filed year in which dividend rate fell below $5.82.
4. The published tests it meets today
Of 30 tests value investors published: 7 met, 23 not met, 0 we could not complete. Counts, never a score.
Meets: High returns and growth; Low beta, profitable; ROIC at or above WACC; Near the 52-week low; High returns, low debt; Low P/S, rising earnings (James O'Shaughnessy); Cash-covered dividend.
What this cannot tell you
What the numbers say today, not the day one stops being true. The reasons are not written down.
An account adds
One email the night a number you wrote down breaks. Silence otherwise.
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How this is computedA computation on accounts filed with the SEC, not a recommendation and not advice. Past filings do not indicate future results. Risk disclaimer.