Value
3.9/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 2.6 |
| P/S | 9.4 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 2.7 |
| PEG | 2.8 |
| Analyst target | 6.0 |
- ▸Forward P/E: 41.3x
- ▸PEG: 4.56
COST · Why this verdict
Why Costco Wholesale (COST) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score5.9/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Costco's 22% YoY growth and predominantly intact earnings beat track record support the premium Consumer Defensive franchise, but the stock trades just below its price target with about 2.2% headroom remaining and an expensive forward multiple that leaves limited margin for error at the current entry.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
A forward P/E of 43.1x and a PEG ratio of 4.75 represent a significant premium to the broader market, and with only about 2.2% headroom to the price target, the risk/reward is unfavorable for new capital at current levels. Valuation breakdown | A pullback in the multiple to a more reasonable level, or a meaningful upward revision to analyst targets, would be needed to create an attractive entry point. | →Stable |
| CounterA strong Piotroski F-score and above-average growth may justify the premium; premium multiples for high-quality Consumer Defensive franchises can persist for extended periods absent a reset in earnings expectations, and the current valuation may simply reflect durable business characteristics. | ||
Revenue and earnings are growing at 22% YoY, a rate that substantiates the premium valuation and demonstrates that execution remains intact despite the stretched multiple. Growth breakdown | YoY revenue and earnings growth sustains at double-digit rates over the next four quarters. | →Stable |
| CounterAny deceleration from the 22% pace could trigger a sharp valuation de-rating given the elevated starting multiple of 43.1x forward earnings; the higher the multiple, the more painful a growth miss tends to be. | ||
Three consecutive EPS beats in the prior three quarters demonstrate a track record of consistent delivery above consensus; the most recent quarter's narrow miss at -0.85% appears isolated given the broader pattern. Earnings | The next quarterly earnings report delivers a positive surprise, confirming the miss was an anomaly rather than the beginning of a new trend. | ↓Deteriorating |
| CounterThe most recent quarter missed estimates, and with the stock near peak valuation levels, any sustained miss pattern could accelerate multiple compression beyond what the growth profile would otherwise warrant. | ||
RSI at 24 in an uptrend context, paired with rising OBV and price above the 200-day moving average, suggests the recent price weakness may represent a consolidation within a longer-term uptrend rather than a structural reversal. Momentum breakdown | RSI recovers above 40 as buying interest returns, with price holding above the 200-day moving average, confirming the pullback was temporary. | ↓Deteriorating |
| CounterAn RSI at 24 has preceded extended consolidation as well as sharp recovery; if the 200-day moving average breaks on sustained volume distribution, the setup would shift from consolidation to a more meaningful trend change that the growth premium would not cushion. | ||
A forward P/E of 43.1x and a PEG ratio of 4.75 represent a significant premium to the broader market, and with only about 2.2% headroom to the price target, the risk/reward is unfavorable for new capital at current levels.
→StableValuation breakdown
- Expectation
- A pullback in the multiple to a more reasonable level, or a meaningful upward revision to analyst targets, would be needed to create an attractive entry point.
CounterA strong Piotroski F-score and above-average growth may justify the premium; premium multiples for high-quality Consumer Defensive franchises can persist for extended periods absent a reset in earnings expectations, and the current valuation may simply reflect durable business characteristics.
Revenue and earnings are growing at 22% YoY, a rate that substantiates the premium valuation and demonstrates that execution remains intact despite the stretched multiple.
→StableGrowth breakdown
- Expectation
- YoY revenue and earnings growth sustains at double-digit rates over the next four quarters.
CounterAny deceleration from the 22% pace could trigger a sharp valuation de-rating given the elevated starting multiple of 43.1x forward earnings; the higher the multiple, the more painful a growth miss tends to be.
Three consecutive EPS beats in the prior three quarters demonstrate a track record of consistent delivery above consensus; the most recent quarter's narrow miss at -0.85% appears isolated given the broader pattern.
↓DeterioratingEarnings
- Expectation
- The next quarterly earnings report delivers a positive surprise, confirming the miss was an anomaly rather than the beginning of a new trend.
CounterThe most recent quarter missed estimates, and with the stock near peak valuation levels, any sustained miss pattern could accelerate multiple compression beyond what the growth profile would otherwise warrant.
RSI at 24 in an uptrend context, paired with rising OBV and price above the 200-day moving average, suggests the recent price weakness may represent a consolidation within a longer-term uptrend rather than a structural reversal.
↓DeterioratingMomentum breakdown
- Expectation
- RSI recovers above 40 as buying interest returns, with price holding above the 200-day moving average, confirming the pullback was temporary.
CounterAn RSI at 24 has preceded extended consolidation as well as sharp recovery; if the 200-day moving average breaks on sustained volume distribution, the setup would shift from consolidation to a more meaningful trend change that the growth premium would not cushion.
Per-dimension breakdown
Quality
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 9.7 |
| ROA | 5.8 |
| Gross margin | 0.0 |
| Op margin | 1.5 |
| Net margin | 1.5 |
| Current ratio | 4.2 |
| FCF quality | 5.9 |
| Moat | 6.8 |
| Piotroski F | 7.8 |
- ▸Excellent ROE: 29%
- ▸Earnings quality warning: 79% FCF/NI
- ▸Strong Piotroski F-Score: 7/9
Growth
8.9/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 7.9 |
| EPS growth | 10.0 |
- ▸Strong growth: 22% YoY
Momentum
3.5/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 10.0 |
| OBV | 1.0 |
| MA position | 2.2 |
| Volume | 0.0 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA but MA still rising (+0.0%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 5.4 |
| Analyst rating | 7.5 |
| Price target | 7.2 |
Insider
7.3/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Negligible insider selling — $847,345 (0.000% of mkt cap)
- ▸Institutions accumulating
Peer rank
5.1/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 0.6 |
| quality rank | 5.6 |
| growth rank | 7.8 |
Technical
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 6.6 |
| support resistance | 6.6 |
| 52w position | 6.9 |
Risk (lower is worse)
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 9.2 |
| days to cover | 8.0 |
| volatility | 6.9 |
| put call | 7.3 |
| implied vol | 7.3 |
| max pain risk | 3.0 |
| beta | 7.8 |
| debt equity | 7.4 |
- ▸Above max pain $730
Catalyst
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 3.3 |
| dividend safety | 8.0 |
| news activity | 7.0 |
- ▸Strong earnings: 3B/1M
- ▸Dividend aristocrat: 0.6% yield
How the verdict was assembled
Engine trigger
Mixed signals. Hold existing position.
Engine technical detail
verdict_path:
L4:PATH_F_HOLD_DEFAULTPassed (6)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:65d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:3.5<4.5
- ASYMMETRY:1.3<1.5@spot
Warning (0)
none
Reward-to-Risk
1.34
Upside
+6.7%
Downside
5.0%
Sizing output
AVOID
SetupRange Bound — RSI 48 mid-range, Bollinger mid-band
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The default F-path HOLD fired without any positive-conviction gate triggering — no momentum acceleration, no quality+value crossover, no setup recognition. Highest-clear gate: INSIDER:OK. Top dim: Growth at 8.9; weakest: Momentum at 3.5. The engine's read is one of pattern absence — no directional conviction in either direction at current asymmetry.
The strongest dimensions are Growth at 8.9, Insider at 7.3, and Risk (lower is worse) at 7.1; the weakest are Momentum at 3.5, Value at 3.9, and Quality at 4.8. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of 1.34 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Expensive Valuation Near Target
Trip ifForward P/E compresses below 35x from the current 43.1x for 2 consecutive quarters.
- P2Strong Growth Sustains Premium
Trip ifYoY revenue and earnings growth falls below 10% for 2 consecutive quarters from the current 22%.
- P3Earnings Beat Track Record
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P4Oversold Pullback Within Uptrend
Trip ifPrice drops below the 200-day moving average and sustains for 4 consecutive weeks.