Costco

Analyst Listing

The following analysts provide coverage for the subject firm as of May 2016:

Broker	Analyst	Analyst Email
Stephens Inc	Ben Wyatt	ben.wyatt@stephens.com
Susquehanna Financial Group	Biju Perincheril	biju.perincheril@sig.com
Johnson Rice & Company	Charles Meade	cmeade@jrco.com
Cowen & Company	Charles Robertson	charles.robertson@cowen.com
Piper Jaffray	David Kistler	david.w.kistler@simmonspjc.com
Wells Fargo Securities	David Tameron	david.tameron@wellsfargo.com
GMP Securities	Derrick Whitfield	dwhitfield@gmpsecurities.com
Credit Suisse	Edward Westlake	edward.westlake@credit-suisse.com
IBERIA Capital Partners	Eric Fox	eric.fox@iberiabank.com
Evercore ISI	Greg Melich	greg.melich@evercoreisi.com
Alembic Global Advisors	James Sullivan	james.sullivan@alembicglobal.com
KLR Group	John Gerdes	jjg@klrgroup.com
Jefferies	Jonathan D. Wolff	jwolff@jefferies.com
Telsey Advisory Group	Joseph Feldman	jfeldman@telseygroup.com
Raymond James	Kevin Smith	kevin.smith@raymondjames.com
Nomura Research	Lloyd Byrne	lloyd.byrne@nomura.com
Seaport Global Securities	Michael Kelly	mkelly@seaportglobal.com
Mitsubishi UFJ Securities (USA)	Michael McAllister	mmcallister@us.sc.mufg.jp
Wolfe Research	Paul Sankey	psankey@wolferesearch.com
Scotia Howard Weil	Peter Kissel	peter.kissel@scotiabank.com
BMO Capital Markets	Phillip Jungwirth	phillip.jungwirth@bmo.com
Capital One Securities	Phillips Johnston	phillips.johnston@capitalone.com
Deutsche Bank Research	Ryan Todd	ryan.todd@db.com
RBC Capital Markets	Scott Hanold	scott.hanold@rbccm.com
Evercore ISI	Stephen Richardson	stephen.richardson@evercoreisi.com
Guggenheim Securities	Subash Chandra	subash.chandra@guggenheimpartners.com
Wunderlich Securities	Vedran Vuk	vedranvuk@wundernet.com
Roth Capital Partners	Chris Lewis	clewis@roth.com
The Benchmark Company, LLC	Jan Wald	jwald@benchmarkcompany.com
Canaccord Genuity	Jason Mills	jmills@canaccordgenuity.com
Brean Capital, LLC	Jason Wittes	jwittes@breancapital.com
Barrington Research	Michael Petusky	mpetusky@brai.com
Stifel Nicolaus	Rick Wise	wiser@stifel.com

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Primary Input Data

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Derived Input Data

Derived Input	Label	2015 Value	2016 Value	Equational Form
Net Operating Profit Less Adjusted Taxes	NOPLAT	2,356	2,438	$NOPLAT\, =\, EBIT\, x\, (1 \,-\, Avg \,\,Tax\,\, Rate\,\, on\,\, EBIT)$
Free Cash Flow	FCF	1,375	2,610	$FCF\,=NOPLAT\,+\,Non-Cash\,Expenses-\Delta NWC\,-\,NCS$
Tax Shield	TS	41	44	$TS\,=\,Interest\,\,Paid\,\,x\,\, Avg \,\,Tax\,\,Rate\,\, on\,\, Pre-Tax\,\, Income$
Invested Capital	IC	17,890	17,170	$IC\,=\,Fixed\,\,Operating\,\,Assets\,\,+\,\,Net\,\, Working\,\, Capital$
Return on Invested Capital	ROIC	13.17%	14.20%	$ROIC\,=\,\frac { NOPLAT }{ IC }$
Net Investment	NetInv	1,504	570	$NetInv\,=\,{ {IC}_{1}}-{{IC}_{0}}+Depreciation$
Investment Rate	IR	63.85%	23.40%	$IR\,=\,\frac {NetInv}{NOPLAT}$
Weighted Average Cost of Capital	WACC_Market	7.43%	8.80%	$WACC\,=\,\frac { E }{ V } { R }_{ E }\,+\,\frac { P }{ V } { R }_{ P }\,+\,\frac { D }{ V } { R }_{ D }\left( 1- Avg\,\, Tax\,\,Rate\,\,on\,\,Pre-Tax\,\,Income \right)$
Weighted Average Cost of Capital	WACC_Book	7.39%	8.07%
Enterprise value	EV_Market	71,499	70,876	$EV\,=\,Market\,\,Cap\,\,Equity\,+\,\,Long\,\,Term\,\,Debt\,-\,Cash$
Enterprise value	EV_Book	70,459	70,749
Long-Run Growth	g = IR x ROIC	8.41%	3.32%	Long-run growth rates of the income variable are used in the Continuing Value portion of the valuation models.
Long-Run Growth	g = % $\Delta$ GDP	2.50%	2.50%
Margin from Operations	M	3.12%	3.12%	$M\,\,=\,\,\frac{EBIT}{SALES}$
Depreciation/Amortization Rate	D	23.72%	25.60%	$D\,\,=\,\,\frac{D+A}{EBITDA}$

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Valuation Multiple Outcomes

The outcomes presented in this study are the result of original input data, derived data, and synthesized inputs.

Equational Form	Observed Value		Single-stage multiple g solution		Two-stage valuation model g solution
Equational Form	12/31/2015	12/31/2016	12/31/2015	12/31/2016	12/31/2015	12/31/2016
EV/SALES $\frac {EV}{Sales} \,= \,\frac{ROIC\, -\, g}{ROIC\,(WACC\,-\,g)}\,(1\,-\,T)\,(M)$	0.62	0.59	5.51%	7.07%	5.97%	7.78%
EV/EBITDA $\frac {EV}{EBITDA} \,= \,\frac{ROIC\, -\, g}{ROIC\,(WACC\,-\,g)}\,(1\,-\,T)\,(1\,-\,D)$	15.05	14.06	5.51%	7.07%	5.97%	7.78%
EV/NOPLAT $\frac {EV}{NOPLAT} \,= \,\frac{ROIC\, -\, g}{ROIC\,(WACC\,-\,g)}$	30.35	29.08	5.51%	7.07%	5.97%	7.78%
EV/FCF_OPS $\frac {EV}{FCF_{OPS}} \,= \,\frac{ROIC\, -\, g}{ROIC\,(WACC\,-\,g)}\,(1\,-\,T)$	52.01	27.16	5.51%	7.07%	5.97%	7.78%
EV/EBIT $\frac {EV}{EBIT} \,= \,\frac{ROIC\, -\, g}{ROIC\,(WACC\,-\,g)}\,(1\,-\,T)$	19.73	18.90	5.51%	7.07%	5.97%	7.78%
EV/IC $\frac {EV}{IC} \,= \,\frac{ROIC\, -\, g}{WACC\,-\,g}$	4.00	4.13	5.51%	7.07%	5.97%	7.78%