From Nasdaq:

Costco (NASDAQ: COST) ended FY’23 on August 27, 2023, with a 39% stock increase, reaching around $667 per share. The company’s consistent revenue growth and customer focus are reflected in its ability to thrive in the retail industry. Costco has seen strong gains in recent years, currently valuing the stock at 46 times earnings, investors could see price pressures, especially with a potential recession.

In its most recent Q1, Costco’s comparable sales grew by 3.9% and its membership fee income increased by 8%. The company’s upcoming membership fee hike will likely boost its steady revenue stream. With a strong renewal rate of 92.8% in the U.S. and Canada, Costco’s financial position remains robust. Additionally, the company boasts nearly $18 billion in cash, cash equivalents, and short-term investments, with only $7 billion in long-term debt.

Revised COST valuation is $653 per share based on a $15.73 expected EPS and a 41.5x P/E multiple for FY 2024. The stock’s current valuation at 46 times earnings is much higher than pre-pandemic levels. Investors could see a range of scenarios, including stock price declines until valuations fall in line, or stock oscillation as earnings grow and valuations catch up. The company’s peers should also be considered when evaluating Costco’s performance.



Read more: Does Costco Stock Have More Room For Gains After Rising 40% in 2023?