Costco: Strong Fundamentals, But Valuation Needs To Cool; Reiterate Sell

Costco Wholesale delivered a strong Q4 with 11.2% revenue growth and 15% EPS growth, reinforcing its reputation as a reliable compounder. COST's disciplined warehouse expansion and robust membership growth support long-term stability, but the current valuation offers a limited margin of safety. My discounted cash flow analysis suggests fair value is ~32% below the current market cap, even after recent price correction. Despite stellar results, I maintain a 'Sell' rating, as the market already prices in double-digit growth, leaving little room for upside or negative surprises.

Costco Wholesale ( COST ) highlighted a few value items in Q4 , such as Kirkland Walnuts from $13.79 to $9.99 and Kirkland Coarse Black Pepper from $6.99 to $5.99. These are decent promotions, with 27% and 14% discounts.