Stock Analysis on Net
Stock Analysis on Net

Costco Wholesale Corp. (NASDAQ:COST)

$24.99

Economic Value Added (EVA)

Microsoft Excel

EVA is registered trademark of Stern Stewart.

Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.

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Economic Profit

Costco Wholesale Corp., economic profit calculation

US$ in millions

Microsoft Excel
12 months ended: Sep 1, 2024 Sep 3, 2023 Aug 28, 2022 Aug 29, 2021 Aug 30, 2020 Sep 1, 2019
Net operating profit after taxes (NOPAT)1
Cost of capital2
Invested capital3
 
Economic profit4

Based on: 10-K (reporting date: 2024-09-01), 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29), 10-K (reporting date: 2020-08-30), 10-K (reporting date: 2019-09-01).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =

Item Description The company
Economic profit Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital. Costco Wholesale Corp. economic profit decreased from 2022 to 2023 but then increased from 2023 to 2024 exceeding 2022 level.

Net Operating Profit after Taxes (NOPAT)

Costco Wholesale Corp., NOPAT calculation

US$ in millions

Microsoft Excel
12 months ended: Sep 1, 2024 Sep 3, 2023 Aug 28, 2022 Aug 29, 2021 Aug 30, 2020 Sep 1, 2019
Net income attributable to Costco
Deferred income tax expense (benefit)1
Increase (decrease) in LIFO reserve2
Increase (decrease) in equity equivalents3
Interest expense
Interest expense, operating lease liability4
Adjusted interest expense
Tax benefit of interest expense5
Adjusted interest expense, after taxes6
Interest income
Investment income, before taxes
Tax expense (benefit) of investment income7
Investment income, after taxes8
Net income (loss) attributable to noncontrolling interest
Net operating profit after taxes (NOPAT)

Based on: 10-K (reporting date: 2024-09-01), 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29), 10-K (reporting date: 2020-08-30), 10-K (reporting date: 2019-09-01).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in LIFO reserve. See details »

3 Addition of increase (decrease) in equity equivalents to net income attributable to Costco.

4 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =

5 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =

6 Addition of after taxes interest expense to net income attributable to Costco.

7 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =

8 Elimination of after taxes investment income.

Item Description The company
NOPAT Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income. Costco Wholesale Corp. NOPAT decreased from 2022 to 2023 but then increased from 2023 to 2024 exceeding 2022 level.

Cash Operating Taxes

Costco Wholesale Corp., cash operating taxes calculation

US$ in millions

Microsoft Excel
12 months ended: Sep 1, 2024 Sep 3, 2023 Aug 28, 2022 Aug 29, 2021 Aug 30, 2020 Sep 1, 2019
Provision for income taxes
Less: Deferred income tax expense (benefit)
Add: Tax savings from interest expense
Less: Tax imposed on investment income
Cash operating taxes

Based on: 10-K (reporting date: 2024-09-01), 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29), 10-K (reporting date: 2020-08-30), 10-K (reporting date: 2019-09-01).

Item Description The company
Cash operating taxes Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction. Costco Wholesale Corp. cash operating taxes increased from 2022 to 2023 and from 2023 to 2024.

Invested Capital

Costco Wholesale Corp., invested capital calculation (financing approach)

US$ in millions

Microsoft Excel
Sep 1, 2024 Sep 3, 2023 Aug 28, 2022 Aug 29, 2021 Aug 30, 2020 Sep 1, 2019
Current portion of long-term debt
Current finance lease liabilities
Long-term debt, excluding current portion
Long-term finance lease liabilities
Operating lease liability1
Total reported debt & leases
Total Costco stockholders’ equity
Net deferred tax (assets) liabilities2
LIFO reserve3
Equity equivalents4
Accumulated other comprehensive (income) loss, net of tax5
Noncontrolling interests
Adjusted total Costco stockholders’ equity
Construction in progress6
Short-term investments7
Invested capital

Based on: 10-K (reporting date: 2024-09-01), 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29), 10-K (reporting date: 2020-08-30), 10-K (reporting date: 2019-09-01).

1 Addition of capitalized operating leases.

2 Elimination of deferred taxes from assets and liabilities. See details »

3 Addition of LIFO reserve. See details »

4 Addition of equity equivalents to total Costco stockholders’ equity.

5 Removal of accumulated other comprehensive income.

6 Subtraction of construction in progress.

7 Subtraction of short-term investments.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. Costco Wholesale Corp. invested capital increased from 2022 to 2023 but then slightly decreased from 2023 to 2024 not reaching 2022 level.

Cost of Capital

Costco Wholesale Corp., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Long-term debt, including current portion and finance lease liabilities3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2024-09-01).

1 US$ in millions

2 Equity. See details »

3 Long-term debt, including current portion and finance lease liabilities. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Long-term debt, including current portion and finance lease liabilities3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2023-09-03).

1 US$ in millions

2 Equity. See details »

3 Long-term debt, including current portion and finance lease liabilities. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Long-term debt, including current portion and finance lease liabilities3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2022-08-28).

1 US$ in millions

2 Equity. See details »

3 Long-term debt, including current portion and finance lease liabilities. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Long-term debt, including current portion and finance lease liabilities3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2021-08-29).

1 US$ in millions

2 Equity. See details »

3 Long-term debt, including current portion and finance lease liabilities. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Long-term debt, including current portion and finance lease liabilities3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2020-08-30).

1 US$ in millions

2 Equity. See details »

3 Long-term debt, including current portion and finance lease liabilities. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Long-term debt, including current portion and finance lease liabilities3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2019-09-01).

1 US$ in millions

2 Equity. See details »

3 Long-term debt, including current portion and finance lease liabilities. See details »

4 Operating lease liability. See details »

Economic Spread Ratio

Costco Wholesale Corp., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel
Sep 1, 2024 Sep 3, 2023 Aug 28, 2022 Aug 29, 2021 Aug 30, 2020 Sep 1, 2019
Selected Financial Data (US$ in millions)
Economic profit1
Invested capital2
Performance Ratio
Economic spread ratio3
Benchmarks
Economic Spread Ratio, Competitors4
Target Corp.
Walmart Inc.

Based on: 10-K (reporting date: 2024-09-01), 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29), 10-K (reporting date: 2020-08-30), 10-K (reporting date: 2019-09-01).

1 Economic profit. See details »

2 Invested capital. See details »

3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =

4 Click competitor name to see calculations.

Performance ratio Description The company
Economic spread ratio The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital. Costco Wholesale Corp. economic spread ratio deteriorated from 2022 to 2023 but then improved from 2023 to 2024 exceeding 2022 level.

Economic Profit Margin

Costco Wholesale Corp., economic profit margin calculation, comparison to benchmarks

Microsoft Excel
Sep 1, 2024 Sep 3, 2023 Aug 28, 2022 Aug 29, 2021 Aug 30, 2020 Sep 1, 2019
Selected Financial Data (US$ in millions)
Economic profit1
Net sales
Performance Ratio
Economic profit margin2
Benchmarks
Economic Profit Margin, Competitors3
Target Corp.
Walmart Inc.

Based on: 10-K (reporting date: 2024-09-01), 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29), 10-K (reporting date: 2020-08-30), 10-K (reporting date: 2019-09-01).

1 Economic profit. See details »

2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Net sales
= 100 × ÷ =

3 Click competitor name to see calculations.

Performance ratio Description The company
Economic profit margin The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin. Costco Wholesale Corp. economic profit margin deteriorated from 2022 to 2023 but then improved from 2023 to 2024 exceeding 2022 level.