Did a complete model of Costco operations. I gave them a generous growth rate on their revenue drivers and maintained cost controls for their store expansion of 23/yr.
my math coves out to $256 Billion, $310 Billion and $278 Billion for their valuations in scenarios where I played around with their drivers and capex led by store growth.
in my base case, their share value should be at $631. I think their current trading at a high P/E of 52-53x compared to their 10-year average around 30-33x backs up what I’ve uncovered.
long story short, the market has Costco incorrectly priced, and without correction, I expect them to trade flat for a few years until earnings and growth story normalize to their market cap.
you can shame me, say “what about this?!” And point to their stock continuing to go higher, but at these valuations, their price will get hit the hardest on even a slight earnings miss.