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    COST · NMS · Consumer Defensive

    Costco Wholesale Corporation

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 389.61

    Market price

    USD 1040.55

    Implied upside

    -62.6%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2026-08-31

    AdjustedCapital expenditure runs at 1.9% of revenue against depreciation of 0.9%. A perpetuity has to be a steady state, so the forecast tapers capex to maintenance at depreciation plus the reinvestment terminal growth requires (g/ROIC of NOPAT), and the terminal year carries on from there. The bridge is shown under Terminal Value.

    Current EV/EBITDA of 31.2x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 389.61-62.6%
    Exit multiple
    USD 638.03-38.7%
    Market price
    USD 1040.55

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn6bn13bnFY27FY28FY29FY30FY31FY32FY33FY34FY35FY36
    Nominal FCFFDiscounted to todayUSD
    LineFY27FY28FY29FY30FY31FY32FY33FY34FY35FY36CAGR
    RevenueUSD 329.5bnUSD 353.8bnUSD 377.7bnUSD 400.9bnUSD 423.1bnUSD 444.0bnUSD 463.2bnUSD 480.4bnUSD 495.3bnUSD 507.7bn+4.9%
    EBITUSD 12.0bnUSD 12.9bnUSD 13.8bnUSD 14.7bnUSD 15.5bnUSD 16.2bnUSD 16.9bnUSD 17.6bnUSD 18.1bnUSD 18.6bn+4.9%
    NOPATUSD 9.5bnUSD 10.2bnUSD 10.9bnUSD 11.6bnUSD 12.2bnUSD 12.8bnUSD 13.4bnUSD 13.9bnUSD 14.3bnUSD 14.7bn+4.9%
    Add depreciation & amortisationUSD 2.9bnUSD 3.1bnUSD 3.3bnUSD 3.5bnUSD 3.7bnUSD 3.9bnUSD 4.1bnUSD 4.2bnUSD 4.3bnUSD 4.4bn+4.9%
    Less capital expenditureUSD -6.4bnUSD -6.6bnUSD -6.7bnUSD -6.8bnUSD -6.8bnUSD -6.8bnUSD -6.7bnUSD -6.5bnUSD -6.3bnUSD -6.1bn-0.6%
    Capex, % of revenue1.9%1.9%1.8%1.7%1.6%1.5%1.4%1.4%1.3%1.2%-
    Less increase in working capitalUSD -152.5mUSD -140.5mUSD -138.4mUSD -134.4mUSD -128.6mUSD -120.8mUSD -111.2mUSD -99.7mUSD -86.4mUSD -71.7m-8.0%
    Free cashflow to firmUSD 5.9bnUSD 6.6bnUSD 7.4bnUSD 8.2bnUSD 9.0bnUSD 9.8bnUSD 10.6bnUSD 11.5bnUSD 12.2bnUSD 13.0bn+9.2%
    Discount factor0.95950.88330.81320.74870.68920.63450.58420.53780.49510.4558-
    Present valueUSD 5.6bnUSD 5.8bnUSD 6.0bnUSD 6.1bnUSD 6.2bnUSD 6.2bnUSD 6.2bnUSD 6.2bnUSD 6.1bnUSD 5.9bn-
    Present Value Of The ForecastUSD 60.4bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta0.901Reported 0.852, pulled toward 1.0 (Blume)
    Cost of equity8.70%Risk-free + beta x equity risk premium
    Cost of debt5.29%Risk-free + 40bp, the spread for a AAA rating at 80.6x interest cover. Book interest / average debt was lower, at 1.7%.
    Market capitalisationUSD 461.1bn98.2% of capital
    Total debtUSD 8.6bn1.8% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC8.62%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 389.61

    62% of EV

    Forecast FCFF, final year
    USD 13.0bn
    Capex at depreciation, working capital in reinvestment
    USD 14.7bn
    Less reinvestment at g/ROIC (11.0% of NOPAT)
    USD -1.6bn
    Capitalised
    USD 13.1bn
    ROIC (reported)
    22.7%
    Terminal value, undiscounted
    USD 218.5bn
    Terminal value, discounted
    USD 99.6bn
    Enterprise value
    USD 160.0bn
    Less net debt
    USD -12.7bn
    Equity value
    USD 172.7bn

    Exit at 20.0x EBITDA

    Value per shareUSD 638.03

    78% of EV

    Terminal value, undiscounted
    USD 460.1bn
    Terminal value, discounted
    USD 209.7bn
    Enterprise value
    USD 270.1bn
    Less net debt
    USD -12.7bn
    Equity value
    USD 282.8bn

    Spread between methods: 48%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    6.62%515.77542.74576.67620.46678.83
    7.62%430.43445.90464.70487.93517.19
    8.62%369.41378.63389.61402.82418.91
    9.62%323.69329.27335.84343.63352.93
    10.62%288.22291.57295.51300.15305.63

    Outlined: this model. Green text: above today's price of 1040.55. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year7.8%5.3%17.9%
    EBIT margin3.9%3.7%9.6%
    Discount rate-8.6%4.8%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.