Analysis of Profitability Ratios
Profitability ratios measure the company’s ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Costco Wholesale Corp., profitability ratios
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).
| Profitability ratio | Description | The company |
|---|---|---|
| Gross profit margin | Gross profit margin indicates the percentage of revenue available to cover operating and other expenditures. | Costco Wholesale Corp.’s gross profit margin ratio deteriorated from 2018 to 2019 but then improved from 2019 to 2020 exceeding 2018 level. |
| Operating profit margin | A profitability ratio calculated as operating income divided by revenue. | Costco Wholesale Corp.’s operating profit margin ratio deteriorated from 2018 to 2019 but then improved from 2019 to 2020 exceeding 2018 level. |
| Net profit margin | An indicator of profitability, calculated as net income divided by revenue. | Costco Wholesale Corp.’s net profit margin ratio improved from 2018 to 2019 and from 2019 to 2020. |
| Profitability ratio | Description | The company |
|---|---|---|
| ROE | A profitability ratio calculated as net income divided by shareholders’ equity. | Costco Wholesale Corp.’s ROE deteriorated from 2018 to 2019 and from 2019 to 2020. |
| ROA | A profitability ratio calculated as net income divided by total assets. | Costco Wholesale Corp.’s ROA improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020. |
Gross Profit Margin
Costco Wholesale Corp., gross profit margin calculation, comparison to benchmarks
| Aug 30, 2020 | Sep 1, 2019 | Sep 2, 2018 | Sep 3, 2017 | Aug 28, 2016 | Aug 30, 2015 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Gross margin | 18,281 | 16,465 | 15,282 | 14,290 | 13,172 | 12,601 | |
| Net sales | 163,220 | 149,351 | 138,434 | 126,172 | 116,073 | 113,666 | |
| Profitability Ratio | |||||||
| Gross profit margin1 | 11.20% | 11.02% | 11.04% | 11.33% | 11.35% | 11.09% | |
| Benchmarks | |||||||
| Gross Profit Margin, Competitors2 | |||||||
| Amazon.com Inc. | 39.57% | 40.99% | 40.25% | 37.07% | 35.09% | — | |
| Dollar General Corp. | 30.59% | 30.45% | 30.77% | 30.85% | 30.96% | — | |
| Home Depot Inc. | 34.09% | 34.34% | 34.05% | 34.16% | 34.19% | — | |
| Lowe’s Cos. Inc. | 31.80% | 32.12% | 34.11% | 34.55% | 34.82% | — | |
| Target Corp. | 28.87% | 28.39% | 28.87% | 29.68% | 29.53% | — | |
| TJX Cos. Inc. | 28.46% | 28.59% | 28.89% | 28.98% | 28.79% | — | |
| Walmart Inc. | 24.10% | 24.50% | 24.68% | 24.94% | 24.58% | — | |
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 2020 Calculation
Gross profit margin = 100 × Gross margin ÷ Net sales
= 100 × 18,281 ÷ 163,220 = 11.20%
2 Click competitor name to see calculations.
| Profitability ratio | Description | The company |
|---|---|---|
| Gross profit margin | Gross profit margin indicates the percentage of revenue available to cover operating and other expenditures. | Costco Wholesale Corp.’s gross profit margin ratio deteriorated from 2018 to 2019 but then improved from 2019 to 2020 exceeding 2018 level. |
Operating Profit Margin
Costco Wholesale Corp., operating profit margin calculation, comparison to benchmarks
| Aug 30, 2020 | Sep 1, 2019 | Sep 2, 2018 | Sep 3, 2017 | Aug 28, 2016 | Aug 30, 2015 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Operating income | 5,435 | 4,737 | 4,480 | 4,111 | 3,672 | 3,624 | |
| Net sales | 163,220 | 149,351 | 138,434 | 126,172 | 116,073 | 113,666 | |
| Profitability Ratio | |||||||
| Operating profit margin1 | 3.33% | 3.17% | 3.24% | 3.26% | 3.16% | 3.19% | |
| Benchmarks | |||||||
| Operating Profit Margin, Competitors2 | |||||||
| Amazon.com Inc. | 5.93% | 5.18% | 5.33% | 2.31% | 3.08% | — | |
| Dollar General Corp. | 8.30% | 8.26% | 8.55% | 9.39% | 9.53% | — | |
| Home Depot Inc. | 14.37% | 14.35% | 14.55% | 14.19% | 13.30% | — | |
| Lowe’s Cos. Inc. | 8.75% | 5.63% | 9.60% | 8.99% | 8.41% | — | |
| Target Corp. | 6.04% | 5.52% | 6.00% | 7.15% | 7.49% | — | |
| TJX Cos. Inc. | 10.59% | 10.82% | 10.84% | 11.60% | 11.97% | — | |
| Walmart Inc. | 3.96% | 4.30% | 4.12% | 4.73% | 5.04% | — | |
| Operating Profit Margin, Sector | |||||||
| General Retailers | 5.90% | 5.66% | 5.89% | 5.72% | 5.97% | — | |
| Operating Profit Margin, Industry | |||||||
| Consumer Services | 6.80% | 7.83% | 8.04% | 8.34% | 8.43% | — | |
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 2020 Calculation
Operating profit margin = 100 × Operating income ÷ Net sales
= 100 × 5,435 ÷ 163,220 = 3.33%
2 Click competitor name to see calculations.
| Profitability ratio | Description | The company |
|---|---|---|
| Operating profit margin | A profitability ratio calculated as operating income divided by revenue. | Costco Wholesale Corp.’s operating profit margin ratio deteriorated from 2018 to 2019 but then improved from 2019 to 2020 exceeding 2018 level. |
Net Profit Margin
Costco Wholesale Corp., net profit margin calculation, comparison to benchmarks
| 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 income attributable to Costco | 4,002 | 3,659 | 3,134 | 2,679 | 2,350 | 2,377 | |
| Net sales | 163,220 | 149,351 | 138,434 | 126,172 | 116,073 | 113,666 | |
| Profitability Ratio | |||||||
| Net profit margin1 | 2.45% | 2.45% | 2.26% | 2.12% | 2.02% | 2.09% | |
| Benchmarks | |||||||
| Net Profit Margin, Competitors2 | |||||||
| Amazon.com Inc. | 5.53% | 4.13% | 4.33% | 1.71% | 1.74% | — | |
| Dollar General Corp. | 6.17% | 6.20% | 6.56% | 5.69% | 5.72% | — | |
| Home Depot Inc. | 10.20% | 10.28% | 8.55% | 8.41% | 7.92% | — | |
| Lowe’s Cos. Inc. | 5.93% | 3.25% | 5.02% | 4.76% | 4.31% | — | |
| Target Corp. | 4.25% | 3.95% | 4.08% | 3.94% | 4.56% | — | |
| TJX Cos. Inc. | 7.84% | 7.85% | 7.27% | 6.93% | 7.36% | — | |
| Walmart Inc. | 2.86% | 1.31% | 1.99% | 2.83% | 3.07% | — | |
| Net Profit Margin, Sector | |||||||
| General Retailers | 4.58% | 3.41% | 3.62% | 3.43% | 3.57% | — | |
| Net Profit Margin, Industry | |||||||
| Consumer Services | 4.63% | 5.03% | 5.07% | 6.37% | 5.14% | — | |
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 2020 Calculation
Net profit margin = 100 × Net income attributable to Costco ÷ Net sales
= 100 × 4,002 ÷ 163,220 = 2.45%
2 Click competitor name to see calculations.
| Profitability ratio | Description | The company |
|---|---|---|
| Net profit margin | An indicator of profitability, calculated as net income divided by revenue. | Costco Wholesale Corp.’s net profit margin ratio improved from 2018 to 2019 and from 2019 to 2020. |
Return on Equity (ROE)
Costco Wholesale Corp., ROE calculation, comparison to benchmarks
| 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 income attributable to Costco | 4,002 | 3,659 | 3,134 | 2,679 | 2,350 | 2,377 | |
| Total Costco stockholders’ equity | 18,284 | 15,243 | 12,799 | 10,778 | 12,079 | 10,617 | |
| Profitability Ratio | |||||||
| ROE1 | 21.89% | 24.00% | 24.49% | 24.86% | 19.46% | 22.39% | |
| Benchmarks | |||||||
| ROE, Competitors2 | |||||||
| Amazon.com Inc. | 22.84% | 18.67% | 23.13% | 10.95% | 12.29% | — | |
| Dollar General Corp. | 25.55% | 24.77% | 25.12% | 23.14% | 21.66% | — | |
| Home Depot Inc. | — | — | 593.54% | 183.64% | 110.97% | — | |
| Lowe’s Cos. Inc. | 217.09% | 63.50% | 58.69% | 48.07% | 33.26% | — | |
| Target Corp. | 27.73% | 26.00% | 25.06% | 24.99% | 25.96% | — | |
| TJX Cos. Inc. | 55.01% | 60.61% | 50.66% | 50.95% | 52.88% | — | |
| Walmart Inc. | 19.93% | 9.20% | 12.66% | 17.54% | 18.24% | — | |
| ROE, Sector | |||||||
| General Retailers | 30.52% | 24.63% | 25.67% | 24.80% | 24.09% | — | |
| ROE, Industry | |||||||
| Consumer Services | 18.98% | 20.83% | 21.33% | 27.27% | 21.40% | — | |
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 2020 Calculation
ROE = 100 × Net income attributable to Costco ÷ Total Costco stockholders’ equity
= 100 × 4,002 ÷ 18,284 = 21.89%
2 Click competitor name to see calculations.
| Profitability ratio | Description | The company |
|---|---|---|
| ROE | A profitability ratio calculated as net income divided by shareholders’ equity. | Costco Wholesale Corp.’s ROE deteriorated from 2018 to 2019 and from 2019 to 2020. |
Return on Assets (ROA)
Costco Wholesale Corp., ROA calculation, comparison to benchmarks
| 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 income attributable to Costco | 4,002 | 3,659 | 3,134 | 2,679 | 2,350 | 2,377 | |
| Total assets | 55,556 | 45,400 | 40,830 | 36,347 | 33,163 | 33,440 | |
| Profitability Ratio | |||||||
| ROA1 | 7.20% | 8.06% | 7.68% | 7.37% | 7.09% | 7.11% | |
| Benchmarks | |||||||
| ROA, Competitors2 | |||||||
| Amazon.com Inc. | 6.64% | 5.14% | 6.19% | 2.31% | 2.84% | — | |
| Dollar General Corp. | 7.50% | 12.04% | 12.30% | 10.72% | 10.35% | — | |
| Home Depot Inc. | 21.94% | 25.27% | 19.38% | 18.52% | 16.47% | — | |
| Lowe’s Cos. Inc. | 10.85% | 6.71% | 9.77% | 8.99% | 8.14% | — | |
| Target Corp. | 7.67% | 7.11% | 7.52% | 7.31% | 8.35% | — | |
| TJX Cos. Inc. | 13.55% | 21.36% | 18.55% | 17.84% | 19.81% | — | |
| Walmart Inc. | 6.29% | 3.04% | 4.82% | 6.86% | 7.36% | — | |
| ROA, Sector | |||||||
| General Retailers | 8.06% | 6.74% | 7.63% | 7.25% | 7.90% | — | |
| ROA, Industry | |||||||
| Consumer Services | 5.07% | 5.78% | 6.13% | 8.54% | 6.92% | — | |
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 2020 Calculation
ROA = 100 × Net income attributable to Costco ÷ Total assets
= 100 × 4,002 ÷ 55,556 = 7.20%
2 Click competitor name to see calculations.
| Profitability ratio | Description | The company |
|---|---|---|
| ROA | A profitability ratio calculated as net income divided by total assets. | Costco Wholesale Corp.’s ROA improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020. |