Verdict
Overvalued
What is Costco Wholesale Corporation (COST) worth?
Currently $929.22 — 25% premium to Dolphy’s fair value · ● live
Steady operator
medium confidence in the point estimate
● live · as of 2026-07-21 21:13 · Market cap $406.8B
As of 2026-07-15, Costco Wholesale Corporation (COST) looks overvalued. Dolphy estimates a fair value of $745.00 versus a current price of $929.22 — a 25% premium to fair value.
Executive summary
Costco (COST) — $917.24 (2026-07-15). Fair value ~$745; the stock trades at a premium to intrinsic value.
Costco is one of the highest-quality retailers on the planet: a membership flywheel with >90% renewal rates, pricing authority that keeps members loyal through cycles, and a balance sheet carrying ~$10B net cash. The business is executing well — TTM revenue ~$293.6B, net income ~$8.8B, EPS ~$19.9, and operating margin expanding to ~3.8% as membership fees drop almost entirely to the bottom line.
The problem is price, not quality. At ~40x forward earnings and ~29x EV/EBITDA, the market is paying a full premium for a business that grows revenue ~7% and EPS in the low-to-mid teens. A disciplined DCF lands at ~$613, a quality-adjusted DCF (lower WACC for a 0.87-beta, net-cash defensive) at ~$785, and a generous 34x forward P/E at ~$769. Blending these and probability-weighting the outcomes gives intrinsic value around $745 — roughly a fifth below the market price. Reverse-engineering the current price requires ~19% FCF growth for five years, which is not consistent with Costco's own track record.
This is a wonderful company at a demanding price. We'd be enthusiastic owners on a pullback into the low $700s; at $917 the margin of safety is negative.
How we value it
DCF (two-stage FCF) cross-checked with quality-adjusted P/E and reverse-DCF
Every figure is computed from SEC filings by the analyst’s calculator tools and fact-checked by a second, independent model.
Investment thesis
About Costco Wholesale Corporation
Costco Wholesale Corporation, together with its subsidiaries, engages in the operation of membership warehouses in the United States, Puerto Rico, Canada, Mexico, Japan, the United Kingdom, Korea, Australia, Taiwan, China, Spain, France, Iceland, New Zealand, and Sweden. It offers merchandise, including sundries, dry groceries, candies, coolers, freezers, deli, liquor, and tobacco; non-food merchandise comprising appliances, small electronics, health and beauty aids, hardware, lawn and garden, sporting goods, tires, toys and seasonal, automotive, stamps, tickets, apparel, furniture, domestics, housewares, special order kiosks, and jewelry; and fresh food, such as meat, produce, service deli, and bakery products. The company is also involved in warehouse ancillary operations, which include gasoline, pharmacies, optical, food courts, hearing-aid centers, and tire installation centers. In addition, it engages in e-commerce, business centers, travel, and other businesses. The company was formerly known as Costco Companies, Inc. and changed its name to Costco Wholesale Corporation in August 1999. Costco Wholesale Corporation was founded in 1976 and is based in Issaquah, Washington.
Frequently asked questions
Is COST a buy?
As of 2026-07-15, Costco Wholesale Corporation (COST) looks overvalued. Dolphy estimates a fair value of $745.00 versus a current price of $929.22 — a 25% premium to fair value.
What is COST's fair value?
Dolphy's estimated fair value for Costco Wholesale Corporation (COST) is $745.00, versus a current market price of $929.22.
Is COST overvalued or undervalued?
Costco Wholesale Corporation (COST) currently looks overvalued — trading at a 25% premium to Dolphy's estimated fair value of $745.00.
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AI-generated research by Dolphy for educational and informational purposes only — not investment advice. Figures are computed from public sources and may contain errors.