Costco Wholesale Corporation reports 17.7% EBITDA growth in 2020 and 9.2% Revenue growth
09/24/2020 • About Costco Wholesale Corporation (
$COST) • By InTwits
Costco Wholesale Corporation reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- EBITDA Margin is relatively stable: 4.4% in FY2020 vs. 4.1% in FY2019 vs. 4.2% in FY2016
- Costco Wholesale Corporation has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.0%. At the same time it's in pair with industry average of 1.7%
- CAPEX is quite volatile: $6m in FY2020, $1m in FY2019, $0m in FY2018, $6m in FY2017, $0m in FY2016
- The company has highly profitable business model: ROIC is 21.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue increased on 9.2%. Revenue growth showed acceleration in FY20Q4 - it increased 12.4% YoY. EBITDA Margin showed almost no change in FY2020.
Gross Margin showed almost no change in FY2020. During the last 5 years Gross Margin bottomed in FY2019 at 13.0%. SG&A as a % of Revenue showed almost no change in FY2020. SG&A as a % of Revenue was relatively stable in FY2016-FY2020.
Net Income margin showed almost no change in FY2020. Net Income margin followed a growing trend at 0.12 pp per annum in the last 5 years.
Investments (CAPEX, working capital and M&A)
In FY2020 Costco Wholesale Corporation had CAPEX/Revenue of 1.7%. The company showed almost no change in CAPEX/Revenue from FY2017 to FY2020. Average CAPEX/Revenue for the last three years was 1.9%.
Return on investment
The company operates at high and attractive ROIC (21.3%) and ROE (23.9%). ROIC decreased slightly on 1.2 pp from 22.5% to 21.3% in FY2020. ROE decreased on 2.2 pp from 26.1% to 23.9% in FY2020. During the last 5 years ROIC topped in FY2018 at 23.9% and was declining since that time. During FY2016-FY2020 ROE topped in FY2018 at 26.6% and was declining since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is -0.3x and Debt / EBITDA is 1.4x. Debt jumped on 52.3% while cash jumped on 46.4%.
Costco Wholesale Corporation has no short term refinancing risk: cash is higher than short term debt (3,438.9%).
Valuation and dividends
The company's trades at EV/EBITDA 21.3x and P/E 39.5x.
Management team
W Craig Jelinek is a Costco Wholesale Corporation's CEO. W Craig Jelinek has spent 9 years with the company. Richard A Galanti is a Costco Wholesale Corporation's CFO. Richard A Galanti has spent 21 years at the company.
Financial and operational results
FY ended 08/30/2020
Costco Wholesale Corporation ($COST) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 118,719 | 129,025 | 141,576 | 152,703 | 166,761 | 9.2% |
| Gross Profit | 15,818 | 17,143 | 18,424 | 19,817 | 21,822 | 10.1% |
| SG&A | 12,068 | 12,950 | 13,876 | 14,994 | 16,332 | 8.9% |
| EBITDA | 4,927 | 5,481 | 5,917 | 6,229 | 7,332 | 17.7% |
| Net Income | 2,350 | 2,679 | 3,134 | 3,659 | 4,002 | 9.4% |
Balance Sheet
|
|---|
| Cash | 3,379 | 4,546 | 6,055 | 8,384 | 12,277 | 46.4% |
| Short Term Debt | 1,110 | 93 | 97 | 1,725 | 357 | -79.3% |
| Long Term Debt | 4,061 | 6,573 | 6,487 | 5,124 | 10,072 | 96.6% |
Cash flow
|
|---|
| Capex | 2,649 | 2,502 | 2,969 | 2,998 | 2,810 | -6.3% |
Ratios
|
|---|
| Revenue growth | 2.2% | 8.7% | 9.7% | 7.9% | 9.2% | |
| EBITDA growth | 3.7% | 11.2% | 8.0% | 5.3% | 17.7% | |
|
|---|
| Gross Margin | 13.3% | 13.3% | 13.0% | 13.0% | 13.1% | 0.1% |
| EBITDA Margin | 4.2% | 4.2% | 4.2% | 4.1% | 4.4% | 0.3% |
| SG&A, % of revenue | 10.2% | 10.0% | 9.8% | 9.8% | 9.8% | -0.0% |
| Net Income Margin | 2.0% | 2.1% | 2.2% | 2.4% | 2.4% | 0.0% |
| CAPEX, % of revenue | 2.2% | 1.9% | 2.1% | 2.0% | 1.7% | -0.3% |
|
|---|
| ROIC | 21.3% | 23.3% | 23.9% | 22.5% | 21.3% | -1.2% |
| ROE | 20.7% | 23.4% | 26.6% | 26.1% | 23.9% | -2.2% |
| Net Debt/EBITDA | 0.4x | 0.4x | 0.1x | -0.2x | -0.3x | -0.0x |
Costco Wholesale Corporation ($COST) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 37,040 | 39,072 | 37,266 | 53,383 | | 5.6% | 10.4% | 7.3% | 12.4% |
| EBITDA | 1,481 | 1,706 | 1,615 | 2,530 | | 15.7% | 9.7% | 10.8% | 30.7% |
| Net Income | 844 | 931 | 838 | 1,389 | | 10.0% | 4.7% | -7.5% | 26.6% |
Balance Sheet
|
|---|
| Cash | 9,027 | 7,786 | 10,826 | 12,277 | | 33.2% | 28.1% | 54.4% | 46.4% |
| Short Term Debt | 1,881 | 686 | 1,749 | 357 | | - | -59.6% | 2.9% | -79.3% |
| Long Term Debt | 7,937 | 8,089 | 10,762 | 10,072 | | 22.5% | 68.7% | 124.3% | 96.6% |
Ratios
|
|---|
| Gross Margin | 13.0% | 12.8% | 13.5% | 13.1% | | 0.3% | -0.4% | 0.5% | 0.1% |
| EBITDA Margin | 4.0% | 4.4% | 4.3% | 4.7% | | 0.3% | -0.0% | 0.1% | 0.7% |
| Net Income Margin | 2.3% | 2.4% | 2.2% | 2.6% | | 0.1% | -0.1% | -0.4% | 0.3% |
Peers in Hypermarkets & Super Centers
Below we provide Costco Wholesale Corporation benchmarking against other companies in Hypermarkets & Super Centers industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
