Value
3.5/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 2.6 |
| P/S | 9.4 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 2.8 |
| PEG | 2.5 |
| Analyst target | 4.0 |
- ▸Forward P/E: 39.3x
- ▸PEG: 4.97
COST · Why this verdict
Why Costco Wholesale (COST) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
Show full disclosure ▾Hide full disclosure ▴
About TrendMatrix. TrendMatrix is a publisher of general securities research and market commentary. We publish on a regular schedule. All content is the same for every subscriber in a tier — we do not provide personalized investment advice and we do not take into account any individual subscriber's financial situation, investment objectives, risk tolerance, tax situation, or holdings.
Not investment advice. TrendMatrix is not a registered investment adviser. Our content is for informational and educational purposes only. Consult your own licensed investment adviser, broker, or tax professional before making any investment decision.
Conflicts and positions. People who build TrendMatrix, or entities they control, may hold positions, long or short, in securities it covers, and may trade them at any time. Positions are not disclosed individually. Verdicts are generated by an automated model applied by the same rules to every covered stock, and are not adjusted for any position held by the people who build TrendMatrix. We do not accept payment from issuers for coverage.
No paid promotion. TrendMatrix does not accept payment from any issuer, broker, or third party in exchange for coverage of any security.
No fiduciary duty. No fiduciary, advisory, or agency relationship is created between you and TrendMatrix by reading our content or subscribing to our service.
Performance. Past performance is not indicative of future results. Performance figures reflect the published model only and do not reflect any individual subscriber's actual results.
VerdictSELL
Overall score5.0/10
ConfidenceMEDIUM
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
Costco's 22% YoY growth and predominantly intact earnings beat track record support the premium Consumer Defensive franchise, but the stock trades just below its price target with about 2.2% headroom remaining and an expensive forward multiple that leaves limited margin for error at the current entry.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
A forward P/E of 43.1x and a PEG ratio of 4.75 represent a significant premium to the broader market, and with only about 2.2% headroom to the price target, the risk/reward is unfavorable for new capital at current levels. Valuation breakdown | A pullback in the multiple to a more reasonable level, or a meaningful upward revision to analyst targets, would be needed to create an attractive entry point. | →Stable |
| CounterA strong Piotroski F-score and above-average growth may justify the premium; premium multiples for high-quality Consumer Defensive franchises can persist for extended periods absent a reset in earnings expectations, and the current valuation may simply reflect durable business characteristics. | ||
Revenue and earnings are growing at 22% YoY, a rate that substantiates the premium valuation and demonstrates that execution remains intact despite the stretched multiple. Growth breakdown | YoY revenue and earnings growth sustains at double-digit rates over the next four quarters. | →Stable |
| CounterAny deceleration from the 22% pace could trigger a sharp valuation de-rating given the elevated starting multiple of 43.1x forward earnings; the higher the multiple, the more painful a growth miss tends to be. | ||
Three consecutive EPS beats in the prior three quarters demonstrate a track record of consistent delivery above consensus; the most recent quarter's narrow miss at -0.85% appears isolated given the broader pattern. Earnings | The next quarterly earnings report delivers a positive surprise, confirming the miss was an anomaly rather than the beginning of a new trend. | ↓Deteriorating |
| CounterThe most recent quarter missed estimates, and with the stock near peak valuation levels, any sustained miss pattern could accelerate multiple compression beyond what the growth profile would otherwise warrant. | ||
RSI at 24 in an uptrend context, paired with rising OBV and price above the 200-day moving average, suggests the recent price weakness may represent a consolidation within a longer-term uptrend rather than a structural reversal. Momentum breakdown | RSI recovers above 40 as buying interest returns, with price holding above the 200-day moving average, confirming the pullback was temporary. | ↓Deteriorating |
| CounterAn RSI at 24 has preceded extended consolidation as well as sharp recovery; if the 200-day moving average breaks on sustained volume distribution, the setup would shift from consolidation to a more meaningful trend change that the growth premium would not cushion. | ||
A forward P/E of 43.1x and a PEG ratio of 4.75 represent a significant premium to the broader market, and with only about 2.2% headroom to the price target, the risk/reward is unfavorable for new capital at current levels.
→StableValuation breakdown
- Expectation
- A pullback in the multiple to a more reasonable level, or a meaningful upward revision to analyst targets, would be needed to create an attractive entry point.
CounterA strong Piotroski F-score and above-average growth may justify the premium; premium multiples for high-quality Consumer Defensive franchises can persist for extended periods absent a reset in earnings expectations, and the current valuation may simply reflect durable business characteristics.
Revenue and earnings are growing at 22% YoY, a rate that substantiates the premium valuation and demonstrates that execution remains intact despite the stretched multiple.
→StableGrowth breakdown
- Expectation
- YoY revenue and earnings growth sustains at double-digit rates over the next four quarters.
CounterAny deceleration from the 22% pace could trigger a sharp valuation de-rating given the elevated starting multiple of 43.1x forward earnings; the higher the multiple, the more painful a growth miss tends to be.
Three consecutive EPS beats in the prior three quarters demonstrate a track record of consistent delivery above consensus; the most recent quarter's narrow miss at -0.85% appears isolated given the broader pattern.
↓DeterioratingEarnings
- Expectation
- The next quarterly earnings report delivers a positive surprise, confirming the miss was an anomaly rather than the beginning of a new trend.
CounterThe most recent quarter missed estimates, and with the stock near peak valuation levels, any sustained miss pattern could accelerate multiple compression beyond what the growth profile would otherwise warrant.
RSI at 24 in an uptrend context, paired with rising OBV and price above the 200-day moving average, suggests the recent price weakness may represent a consolidation within a longer-term uptrend rather than a structural reversal.
↓DeterioratingMomentum breakdown
- Expectation
- RSI recovers above 40 as buying interest returns, with price holding above the 200-day moving average, confirming the pullback was temporary.
CounterAn RSI at 24 has preceded extended consolidation as well as sharp recovery; if the 200-day moving average breaks on sustained volume distribution, the setup would shift from consolidation to a more meaningful trend change that the growth premium would not cushion.
Per-dimension breakdown
Quality
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 9.5 |
| ROA | 5.8 |
| Gross margin | 0.0 |
| Op margin | 1.5 |
| Net margin | 1.5 |
| Current ratio | 4.2 |
| FCF quality | 5.5 |
| Moat | 7.5 |
| Piotroski F | 7.8 |
- ▸Excellent ROE: 28%
- ▸Earnings quality warning: 73% FCF/NI
- ▸Wide economic moat
- ▸Compounder quality: strong returns + growth
Growth
5.2/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 5.3 |
| EPS growth | 5.0 |
Momentum
4.3/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 6.5 |
| OBV | 1.0 |
| MA position | 9.0 |
| Volume | 0.0 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.5 |
| Price target | 6.1 |
| erm sentiment | 5.2 |
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.0 |
- ▸Negligible insider selling — $1,054,026 (0.000% of mkt cap)
Peer rank
5.0/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 0.6 |
| quality rank | 6.1 |
| growth rank | 5.6 |
Technical
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 3.4 |
| support resistance | 2.6 |
| 52w position | 8.1 |
| gap | 5.0 |
Risk (lower is worse)
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 9.1 |
| days to cover | 7.5 |
| volatility | 8.3 |
| put call | 6.6 |
| implied vol | 8.0 |
| max pain risk | 3.0 |
| beta | 7.8 |
| debt equity | 8.9 |
- ▸Above max pain $835
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 3.6 |
| dividend safety | 7.5 |
- ▸Strong earnings: 3B/1M
- ▸Dividend aristocrat: 0.6% yield
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (5)
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:42d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:4.3<4.5
- ASYMMETRY:-0.1=NEGATIVE
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-0.12
Upside
-1.0%
Downside
8.3%
Sizing output
AVOID
SetupMomentum Cont — Trend continuation, RSI 66, MACD bullish
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.3 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Risk (lower is worse) at 7.4) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:4.3<4.5, ASYMMETRY:-0.1=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.12 — supplementary context, not the trigger for this path.
The strongest dimensions are Risk (lower is worse) at 7.4, Sentiment at 6.4, and Catalyst at 5.6; the weakest are Value at 3.5, Momentum at 4.3, and Technical at 4.8. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of -0.12 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Expensive Valuation Near Target
Trip ifForward P/E compresses below 35x from the current 43.1x for 2 consecutive quarters.
- P2Strong Growth Sustains Premium
Trip ifYoY revenue and earnings growth falls below 10% for 2 consecutive quarters from the current 22%.
- P3Earnings Beat Track Record
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P4Oversold Pullback Within Uptrend
Trip ifPrice drops below the 200-day moving average and sustains for 4 consecutive weeks.