Is Costco's Stock Too Expensive Now?
Costco Wholesale (NASDAQ: COST) is trading right around $1,000 per share. For many investors, that high a number can induce a bit of sticker shock. That's understandable, but its current price tag isn't necessarily indicative of overvaluation.
The valuation concern is valid, however, as Costco's forward P/E ratio is just under 50, and its trailing P/E is just over 50. That's expensive for the industry, but Costco has built a business unlike other retailers. Costco boasts membership renewal rates above 90%. This creates cash flow predictability and a competitive moat.
Also, because of Costco's size, it can buy products in enormous quantities and pass those savings on to consumers. This is a flywheel that is difficult for competitors to disrupt. Consumer Reports recently completed a study that found Costco's prices are 21.4% lower than rival 's.
Source Fool.com
Walmart Inc. Stock
The stock is an absolute favorite of our community with 100 Buy predictions and no Sell predictions.
On the other hand, the target price of 109 € is below the current price of 111.02 € for Walmart Inc., so the potential is actually -1.82%.
