Costco offers investors the highest near-term cash flow visibility in our defensivecoverage sector. The company books nearly all its profits 12 months in advance.Membership revenue, although deferred over the life of the annual membership, ispaid at Read more
Costco offers investors the highest near-term cash flow visibility in the defensive sector because of its membership fee model and high-quality customer base.
The loss-leader capabilities of Costco's business model should continue to drive disproportionate market share gains over the long term.
In contrast to its big-box industry peers, Costco's international operations generate returns above its cost of capital.
The company trades toward the higher end of the defensive sector on a P/E basis but it can grow into a more attractive multiple because of sustained, double-digit EPS growth. Read more
There is little room for further household penetration because Costco already has more than 67 million members, so long-term sales and earnings growth forecasts may not be sustainable.
There is potential for the private equity firm that acquired BJ's Wholesale club to re-accelerate domestic warehouse openings, which would create a tougher competitive environment.
New club openings in existing markets could lead to cannibalization of sales from older locations, which could temper store productivity. Securing suitable real estate options for 140,000-square-foot warehouse clubs can be a challenge in urban areas. Read more
Craig Jelinek assumed the CEO role, replacing co-founder and Morningstar's 2011CEO of the Year James D. Sinegal. Jelinek has been with Costco for more than 28years. Prior to assuming the CEO role, Jelinek's more recent positions includedpresident and Read more
As of March, Costco operated 448 membership warehouse clubs in the UnitedStates, 85 in Canada, 32 in Mexico, 23 in the United Kingdom, 13 in Japan, ninein Taiwan, nine in Read more