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Let's talk about the popular Costco Wholesale Corporation (NASDAQ:COST). The company's shares received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$995 at one point, and dropping to the lows of US$874. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Costco Wholesale's current trading price of US$922 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Costco Wholesale’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
View our latest analysis for Costco Wholesale
Is Costco Wholesale Still Cheap?
The stock seems fairly valued at the moment according to our valuation model. It’s trading around 8.6% below our intrinsic value, which means if you buy Costco Wholesale today, you’d be paying a fair price for it. And if you believe the company’s true value is $1009.36, then there’s not much of an upside to gain from mispricing. In addition to this, Costco Wholesale has a low beta, which suggests its share price is less volatile than the wider market.
Can we expect growth from Costco Wholesale?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by 31% over the next couple of years, the future seems bright for Costco Wholesale. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What This Means For You
Are you a shareholder? It seems like the market has already priced in COST’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping tabs on COST, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.