As of June 25, 2026, Costco Wholesale Corp's estimated intrinsic value ranges from $196.47 to $1638.02 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $1638.02 | +70.4% |
| Discounted Cash Flow (5Y) | $1279.99 | +33.2% |
| Dividend Discount Model (Multi-Stage) | $1081.77 | +12.6% |
| Dividend Discount Model (Stable) | $452.39 | -52.9% |
| Earnings Power Value | $196.47 | -79.6% |
Is Costco Wholesale Corp (COST) undervalued or overvalued?
With the current market price at $961.09, the stock appears to be moderately undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Costco Wholesale Corp's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.38 | 0.43 |
| Cost of equity | 5.6% | 7.3% |
| Cost of debt | 4.0% | 4.5% |
| Tax rate | 24.5% | 24.8% |
| Debt/Equity ratio | 0.02 | 0.02 |
| After-tax WACC | 5.6% | 7.2% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $1,280 | $554,411M | 84.8% |
| 10-Year Growth | $1,638 | $713,204M | 71.3% |
| 5-Year EBITDA | $617 | $260,185M | 67.7% |
| 10-Year EBITDA | $912 | $391,213M | 47.6% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $4,645M |
| Discount Rate (WACC) | 7.2% - 5.6% |
| Enterprise Value | $64,559M - $83,166M |
| Net Debt | $(13,276)M |
| Equity Value | $77,835M - $96,442M |
| Outstanding Shares | 444M |
| Fair Value | $175 - $217 |
| Selected Fair Value | $196.47 |
| Metric | Value |
|---|---|
| Market Capitalization | $426253M |
| Enterprise Value | $412977M |
| Trailing P/E | 48.23 |
| Forward P/E | 33.59 |
| Trailing EV/EBITDA | 5.50 |
| Current Dividend Yield | 54.67% |
| Dividend Growth Rate (5Y) | -21.50% |
| Debt-to-Equity Ratio | 0.02 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $491.41 |
| Discounted Cash Flow (5Y) | 25% | $320.00 |
| Dividend Discount Model (Multi-Stage) | 20% | $216.35 |
| Dividend Discount Model (Stable) | 15% | $67.86 |
| Earnings Power Value | 10% | $19.65 |
| Weighted Average | 100% | $1115.26 |
Based on our comprehensive valuation analysis, Costco Wholesale Corp's intrinsic value is $1115.26, which is approximately 16.0% above the current market price of $961.09.
Key investment considerations:
Given these factors, we believe Costco Wholesale Corp is currently moderately undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.