Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Costco Wholesale Corp. (NASDAQ:COST)

Return on Capital (ROC)

Advanced level

Return on capital (ROC) is after tax rate of return on net business assets. ROIC is unaffected by changes in interest rates or company’s debt and equity structure. It measures business productivity performance.


Return on Invested Capital (ROIC)

Costco Wholesale Corp., ROIC calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Aug 30, 2020 Sep 1, 2019 Sep 2, 2018 Sep 3, 2017 Aug 28, 2016 Aug 30, 2015
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 4,254  3,979  3,353  2,757  2,700  2,400 
Invested capital2 28,355  23,538  20,361  18,521  18,450  17,366 
Performance Ratio
ROIC3 15.00% 16.91% 16.47% 14.89% 14.63% 13.82%
Benchmarks
ROIC, Competitors4
Amazon.com Inc. 12.59% 13.28% 5.94% 10.40% 7.00%
Dollar General Corp. 11.22% 10.94% 9.31% 8.86% 8.94% 8.15%
Home Depot Inc. 34.91% 35.70% 27.93% 25.73% 23.46% 22.47%
Lowe’s Cos. Inc. 18.00% 12.51% 15.33% 14.36% 12.78% 13.07%
Target Corp. 14.30% 14.14% 12.07% 12.75% 12.12% 10.31%
TJX Cos. Inc. 19.13% 18.60% 16.31% 16.38% 18.59% 19.20%
Walmart Inc. 10.88% 5.72% 8.64% 11.52% 10.49% 12.30%

Based on: 10-K (filing date: 2020-10-07), 10-K (filing date: 2019-10-11), 10-K (filing date: 2018-10-26), 10-K (filing date: 2017-10-18), 10-K (filing date: 2016-10-12), 10-K (filing date: 2015-10-14).

1 NOPAT. See details »

2 Invested capital. See details »

3 2020 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 4,254 ÷ 28,355 = 15.00%

4 Click competitor name to see calculations.

Performance ratio Description The company
ROIC A measure of the periodic, after tax, cash-on-cash yield earned in the business. Costco Wholesale Corp.’s ROIC improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.

Decomposition of ROIC

Costco Wholesale Corp., decomposition of ROIC

Microsoft Excel LibreOffice Calc
ROIC = OPM1 × TO2 × 1 – CTR3
Aug 30, 2020 15.00% = 3.37% × 5.76 × 77.35%
Sep 1, 2019 16.91% = 3.30% × 6.35 × 80.82%
Sep 2, 2018 16.47% = 3.41% × 6.80 × 71.02%
Sep 3, 2017 14.89% = 3.31% × 6.81 × 65.94%
Aug 28, 2016 14.63% = 3.23% × 6.29 × 72.04%
Aug 30, 2015 13.82% = 3.31% × 6.55 × 63.83%

Based on: 10-K (filing date: 2020-10-07), 10-K (filing date: 2019-10-11), 10-K (filing date: 2018-10-26), 10-K (filing date: 2017-10-18), 10-K (filing date: 2016-10-12), 10-K (filing date: 2015-10-14).

1 Operating profit margin (OPM). See calculations »

2 Turnover of capital (TO). See calculations »

3 Effective cash tax rate (CTR). See calculations »

The primary reason for the decrease in return on invested capital (ROIC) over 2020 year is the decrease in efficiency measured by turnover of capital (TO) ratio.


Operating Profit Margin (OPM)

Costco Wholesale Corp., OPM calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Aug 30, 2020 Sep 1, 2019 Sep 2, 2018 Sep 3, 2017 Aug 28, 2016 Aug 30, 2015
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 4,254  3,979  3,353  2,757  2,700  2,400 
Add: Cash operating taxes2 1,246  944  1,368  1,424  1,048  1,360 
Net operating profit before taxes (NOPBT) 5,500  4,923  4,721  4,181  3,748  3,759 
 
Net sales 163,220  149,351  138,434  126,172  116,073  113,666 
Profitability Ratio
OPM3 3.37% 3.30% 3.41% 3.31% 3.23% 3.31%
Benchmarks
OPM, Competitors4
Amazon.com Inc. 6.37% 6.29% 3.30% 4.62% 3.15%
Dollar General Corp. 9.65% 9.52% 9.56% 10.23% 10.43% 10.17%
Home Depot Inc. 14.80% 14.70% 15.10% 14.77% 13.94% 13.32%
Lowe’s Cos. Inc. 8.61% 6.38% 9.56% 9.72% 9.07% 9.26%
Target Corp. 6.17% 5.67% 6.18% 7.35% 7.67% 6.41%
TJX Cos. Inc. 11.23% 11.30% 11.44% 11.94% 12.79% 13.18%
Walmart Inc. 4.52% 2.84% 3.65% 4.93% 5.26% 5.84%

Based on: 10-K (filing date: 2020-10-07), 10-K (filing date: 2019-10-11), 10-K (filing date: 2018-10-26), 10-K (filing date: 2017-10-18), 10-K (filing date: 2016-10-12), 10-K (filing date: 2015-10-14).

1 NOPAT. See details »

2 Cash operating taxes. See details »

3 2020 Calculation
OPM = 100 × NOPBT ÷ Net sales
= 100 × 5,500 ÷ 163,220 = 3.37%

4 Click competitor name to see calculations.

Profitability ratio Description The company
OPM The operating profit margin (OPM) is the ratio of pretax economic earnings, or NOPBT, to sales. Costco Wholesale Corp.’s OPM deteriorated from 2018 to 2019 but then improved from 2019 to 2020 not reaching 2018 level.

Turnover of Capital (TO)

Costco Wholesale Corp., TO calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Aug 30, 2020 Sep 1, 2019 Sep 2, 2018 Sep 3, 2017 Aug 28, 2016 Aug 30, 2015
Selected Financial Data (US$ in millions)
Net sales 163,220  149,351  138,434  126,172  116,073  113,666 
Invested capital1 28,355  23,538  20,361  18,521  18,450  17,366 
Efficiency Ratio
TO2 5.76 6.35 6.80 6.81 6.29 6.55
Benchmarks
TO, Competitors3
Amazon.com Inc. 2.21 2.28 2.26 3.20 3.24
Dollar General Corp. 1.45 1.42 1.35 1.35 1.35 1.27
Home Depot Inc. 3.01 3.17 2.87 2.75 2.62 2.59
Lowe’s Cos. Inc. 2.69 2.86 2.47 2.39 2.41 2.29
Target Corp. 2.83 2.86 2.66 2.57 2.57 2.41
TJX Cos. Inc. 2.29 2.30 2.22 2.22 2.30 2.23
Walmart Inc. 3.11 3.21 3.48 3.24 3.07 3.21

Based on: 10-K (filing date: 2020-10-07), 10-K (filing date: 2019-10-11), 10-K (filing date: 2018-10-26), 10-K (filing date: 2017-10-18), 10-K (filing date: 2016-10-12), 10-K (filing date: 2015-10-14).

1 Invested capital. See details »

2 2020 Calculation
TO = Net sales ÷ Invested capital
= 163,220 ÷ 28,355 = 5.76

3 Click competitor name to see calculations.

Efficiency ratio Description The company
TO The turnover of capital (TO) is the ratio of sales to invested capital. Capital turnover is a function of the efficiency of working capital management and of net fixed assets. Costco Wholesale Corp.’s TO deteriorated from 2018 to 2019 and from 2019 to 2020.

Effective Cash Tax Rate (CTR)

Costco Wholesale Corp., CTR calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Aug 30, 2020 Sep 1, 2019 Sep 2, 2018 Sep 3, 2017 Aug 28, 2016 Aug 30, 2015
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 4,254  3,979  3,353  2,757  2,700  2,400 
Add: Cash operating taxes2 1,246  944  1,368  1,424  1,048  1,360 
Net operating profit before taxes (NOPBT) 5,500  4,923  4,721  4,181  3,748  3,759 
Tax Rate
CTR3 22.65% 19.18% 28.98% 34.06% 27.96% 36.17%
Benchmarks
CTR, Competitors4
Amazon.com Inc. 10.59% 7.26% 20.39% 29.64% 31.33%
Dollar General Corp. 19.88% 18.75% 27.64% 35.82% 36.32% 36.89%
Home Depot Inc. 21.74% 23.26% 35.67% 36.71% 35.80% 34.80%
Lowe’s Cos. Inc. 22.32% 31.40% 34.96% 38.25% 41.52% 38.25%
Target Corp. 18.12% 12.76% 26.52% 32.40% 38.55% 33.25%
TJX Cos. Inc. 25.59% 28.37% 35.80% 38.22% 36.75% 34.74%
Walmart Inc. 22.54% 37.20% 31.97% 27.77% 35.04% 34.38%

Based on: 10-K (filing date: 2020-10-07), 10-K (filing date: 2019-10-11), 10-K (filing date: 2018-10-26), 10-K (filing date: 2017-10-18), 10-K (filing date: 2016-10-12), 10-K (filing date: 2015-10-14).

1 NOPAT. See details »

2 Cash operating taxes. See details »

3 2020 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 1,246 ÷ 5,500 = 22.65%

4 Click competitor name to see calculations.

Tax rate Description The company
CTR Effective cash tax rate on operating income. Costco Wholesale Corp.’s CTR decreased from 2018 to 2019 but then slightly increased from 2019 to 2020.