Costco Wholesale Corporation (COST) DCF Valuation
Transparent DCF models put Costco Wholesale Corporation (COST)'s fair value in a range of $247.44 – $319.40 — the low end is TGM's conservative base case (5% FCF growth, 10% discount), the high end the analyst consensus (FMP). Today's price of $968.59 sits above that range — by these conservative assumptions it looks richly valued; the reverse-DCF below is the better lens for a high-growth name.
Reverse DCF: at today's $968.59, the market is pricing in roughly +24.5%/yr free-cash-flow growth over the next decade (at a 10% required return) — versus its actual 5-year FCF CAGR of +5.0%. The price is betting on acceleration above its track record.
Current Price
$968.59
Fair-Value Range
$247.44 – $319.40
Market-Implied Growth
+24.5%/yr
vs +5.0% 5Y actual
COST DCF Fair Value Calculator
Edit the assumptions to see how they change the estimated fair value. Illustrative model — not investment advice. Defaults to a conservative base case; the analyst (FMP) DCF, where available, is shown as a reference below.
Base inputs: FCF $6.2B · 0.44B shares · net cash $8.4B
Estimated Fair Value
$247.44
-74.5% vs $968.59
Sensitivity — fair value by discount rate × terminal growth
How the estimated fair value shifts with the discount rate (WACC) and terminal growth, holding your 5.0%/yr FCF growth and 10-year horizon fixed. Green = above today's $968.59; red = below. Your current case is outlined.
| WACC ↓ / Terminal → | 1.50% | 2.00% | 2.50% | 3.00% | 3.50% |
|---|---|---|---|---|---|
| 8.0% | $303 | $317 | $335 | $355 | $380 |
| 9.0% | $263 | $273 | $284 | $298 | $313 |
| 10.0% | $232 | $239 | $247 | $257 | $267 |
| 11.0% | $208 | $214 | $219 | $226 | $233 |
| 12.0% | $189 | $193 | $197 | $202 | $207 |
About Costco Wholesale Corporation
Costco Wholesale Corporation, alongside its group entities, operates membership-based retail warehouses across a broad international scope, spanning the United States, Puerto Rico, Canada, the United Kingdom, Mexico, Japan, South Korea, Australia, Spain, France, Iceland, China, and Taiwan. These outlets provide customers with an extensive array of both well-known branded and proprietary private-label products. Their vast inventory includes household staples, shelf-stable groceries, confectionery, chilled and frozen items, alcoholic beverages, tobacco, and deli selections. Furthermore, the stores stock major appliances, consumer electronics, health and beauty aids, hardware, garden and patio furniture, sporting goods, vehicle tires, toys, seasonal merchandise, office supplies, automotive maintenance products, postage services, event tickets, apparel, small kitchen appliances, home furnishings, domestic textiles, kitchenware, custom-order kiosks, and fine jewelry. Fresh departments offer meat, produce, a service deli, and bakery items. Beyond retail goods, Costco provides in-store amenities such as pharmacies, optical clinics, food courts, hearing aid centers, and tire installation facilities, in addition to managing 636 gas stations. The company also extends its offerings online through business delivery, travel booking, and same-day grocery fulfillment in various countries. As of August 29, 2021, Costco maintained a global network of 815 membership warehouses, with 564 located in the United States and Puerto Rico, 105 in Canada, 39 in Mexico, 30 in Japan, 29 in the United Kingdom, 16 in South Korea, 14 in Taiwan, 12 in Australia, 3 in Spain, and one each in Iceland, France, and China. Digital storefronts facilitate e-commerce operations in the United States, Canada, the United Kingdom, Mexico, South Korea, Taiwan, Japan, and Australia. Founded in 1976, the enterprise was originally known as Costco Companies, Inc. before officially adopting the name Costco Wholesale Corporation in August 1999. Its corporate headquarters are situated in Issaquah, Washington.
- Sector
- Consumer Defensive
- Industry
- Discount Stores
- CEO
- Ron Vachris