MODEL VERDICT
Costco Wholesale Corporation (COST) — Relative Valuation
Peer multiples, Monte Carlo simulation & quality-adjusted fair value
Popular:
Peer multiples, Monte Carlo simulation & quality-adjusted fair value
Composite score derived from valuation, quality, and risk factors
Quantitative model thresholds · For educational and research purposes only
Each row records the model's monthly assessment. High Conviction = the model detected notable undervaluation vs peers. Neutral = no notable divergence was found. The return column shows the actual price change over 90 days for reference. This is a quantitative observation log — not investment advice.
| Date | Assessment | Score | Price | Status | 90d Fwd Return |
|---|---|---|---|---|---|
| Feb 28, 2026 | NEUTRAL | 0.24 | $1010.79 | CURRENT | — |
| Feb 21, 2026 | NEUTRAL | 0.24 | $985.27 | CURRENT | — |
| Feb 14, 2026 | NEUTRAL | 0.24 | $1018.48 | CURRENT | — |
| Feb 11, 2026 | NEUTRAL | 0.24 | $971.23 | CURRENT | — |
| Jan 11, 2026 | NEUTRAL | 0.19 | $924.88 | Below threshold | +7.9% |
Historical model observations for research purposes only. Past quantitative patterns do not predict future results. Not a recommendation to buy, sell, or hold any security.
| Methodology | Fair Value | vs Current | Weight | Quality | Status |
|---|---|---|---|---|---|
| Forward P/E 9 analyst estimates | $561.62 | -44.4% | 20% | A- | Analyst Est. |
| EV/EBITDA 10 industry peers | $485.93 | -51.9% | 20% | A- | Peer Data |
| Industry Median P/E 9 industry peers | $561.35 | -44.5% | 15% | A | Peer Data |
| Price / Free Cash Flow 10 industry peers | $483.14 | -52.2% | 15% | B+ | Peer Data |
| EV/EBIT 10 industry peers | $499.79 | -50.6% | 8% | B+ | Peer Data |
| EV/FCF 10 industry peers | $519.01 | -48.7% | 7% | B | Model Driven |
| Peg Ratio 7 industry peers | $774.39 | -23.4% | 5% | B | Data |
| EV To Revenue 10 industry peers | $822.17 | -18.7% | 4% | B | Data |
| Price / Sales 10 industry peers | $619.47 | -38.7% | 3% | B | Model Driven |
| Earnings Yield 9 industry peers | $552.66 | -45.3% | 2% | B | Data |
| FCF Yield 10 industry peers | $467.24 | -53.8% | 1% | B | Data |
| Weighted Output Blended model output | $652.30 | -35.5% | 100% | 91 | SIGNIFICANTLY OVERVALUED |
| EPS Growth ↓ | P/E Multiple → | 48× | 52× | 56× (Current) | 60× | 64× |
|---|---|---|---|---|---|
| Bear Case (6%) | $927 | $1004 | $1081 | $1159 | $1236 |
| Conservative (10%) | $960 | $1040 | $1120 | $1200 | $1280 |
| Base Case (15.1%) | $1006 | $1090 | $1174 | $1258 | $1341 |
| Bull Case (20%) | $1052 | $1140 | $1228 | $1315 | $1403 |
Cross-sectional regression predicting expected multiples based on growth, margins, ROIC, and beta.
| Multiple | Avg | Median | Min | Max | Std |
|---|---|---|---|---|---|
| P/E Ratio | 44.54 | 46.62 | 34.74 | 55.33 | 7.60 |
| EV/EBIT | 32.38 | 33.37 | 25.24 | 40.96 | 5.67 |
| EV/EBITDA | 26.28 | 27.21 | 20.05 | 35.23 | 5.48 |
| P/FCF | 46.47 | 46.97 | 27.64 | 61.48 | 11.45 |
| P/FFO | 32.41 | 33.41 | 25.00 | 42.43 | 6.43 |
| P/TBV | 11.95 | 11.71 | 8.35 | 17.25 | 3.20 |
| P/AFFO | 65.91 | 65.81 | 48.00 | 83.27 | 12.36 |
| P/B Ratio | 11.88 | 11.71 | 8.35 | 17.25 | 3.16 |
| Div Yield | 0.01 | 0.01 | 0.00 | 0.02 | 0.01 |
| P/S Ratio | 1.18 | 1.21 | 0.85 | 1.60 | 0.28 |
Based on our peer multiples analysis with 28 valuation metrics, the model estimates COST's fair value at $652.30 vs the current price of $1010.79, implying -35.5% downside potential. Model verdict: Significantly Overvalued. Confidence: 91/100. This is a quantitative estimate, not a recommendation.
The blended fair value of $652.30 is calculated using four lenses: industry median multiples (40%), historical multiples (30%), forward estimates (20%), and quality-adjusted multiples (10%). Monte Carlo simulation (10,000 iterations) gives a range of $563.92 (P10) to $678.82 (P90), with a median of $620.68.
COST's current P/E of 55.5x compares to the industry median of 30.8x (9 peers in the group). This represents a +80.1% premium to the industry. The historical average P/E is 44.5x over 7 years. Signal: High Premium.
57 analysts cover COST with a consensus rating of Buy. The consensus price target is $1048.21 (range: $769.00 — $1171.00), implying +3.7% upside from the current price. Grade breakdown: Strong Buy (0), Buy (37), Hold (19), Sell (1), Strong Sell (0).
The model confidence score is 91/100, based on: data completeness (30), peer quality (25), historical depth (20), earnings stability (12), and model agreement (4). Cyclicality penalty: -0 points. The model shows strong agreement across inputs.
The model flags several key risks: (1) Margin reversion: Current net margin of 3.0% is 0.3 percentage points above the 7-year average (2.6%), with a Z-score of +1.6σ. If margins normalize, fair value could drop to ~$719. (2) Multiple compression: COST trades at the 7780th percentile of its historical P/E range. A reversion to median (44.5×) would imply significant downside. (3) Macro/regulatory risks are not captured in this model but remain material.
Peak earnings risk refers to the possibility that COST's current profitability is above its sustainable long-term trend. The model detects a margin Z-score of +1.6σ, meaning margins are 1.6 standard deviations above their historical average. If margins revert to the 7-year mean (2.6%), the model estimates fair value drops by 2890.0% to approximately $719. This isn't a prediction — it's a scenario analysis.
No. This dashboard is a quantitative research tool for educational and informational purposes only. It is not investment advice, a solicitation, or a recommendation to buy, sell, or hold any security. The operator of this platform is not a registered investment advisor (RIA), broker-dealer, or financial planner. All model outputs, fair value estimates, signals, and scenarios are the result of automated quantitative computations and should not be construed as professional financial guidance. You should consult a qualified, licensed financial advisor before making any investment decisions. Past model performance is not indicative of future results.