Company Commentary on Costco's Expanding PE Multiple

18 days ago

"I did some research over the weekend. Um, and the PE of Costco going back to the start of the 21st century was around 20. Then it just exploded higher, got as high as 60 earlier in the year. I think it's not solely because Costco is suddenly massively more profitable; rather, it’s a combination of modest margin tailwinds, emphasis on modest growth in e-commerce and international scale, the strength and stability of the membership model, a premium multiple for perceived defensive qualities, and investor rerating dynamics."

The speaker provides detailed commentary on Costco's valuation, noting that its PE ratio has expanded from around 20 to as high as 60. The commentary stresses that this increase isn’t driven by a marked improvement in profitability, but by various qualitative factors such as margin tailwinds, e-commerce growth, and a stable membership model. This adds investor color to the stock without making a direct trade call.

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