Mr. Market loves Costco (COST). He paid $555.71 for Costco Wholesale (COST) on 25 March 2022.
Hence, investors will ask how much money is Costco making and if the numbers justify the price? My answer is maybe because Costco is making more money.
For example, Costco reported a quarterly gross profit of $6.387 billion on 28 February 2022. The quarterly gross profit rose from $5.891 billion on 28 February 2021. Similarly, the quarterly operating income rose from $1.34 billion on 28 February 2021 to $1.812 on 28 February 2022.
Costco (NASDAQ: COST) added value over the past year. For instance, Costco’s cash and short-term investments grew from $9.254 billion on 28 February 2021 to $12.296 billion on 28 February 2022.
Similarly, Costco’s total assets grew from $54.918 billion on 28 February 2021 to $63.078 billion on 28 February 2022. Thus, Costco’s value is growing.
I think Costco’s most “valuable asset” is the tens of millions of Costco card holders. That asset is growing. For instance, Statista estimates Costco’s worldwide membership grew from 98.5 million in 2029 to 105.5 million in 2020 to 111.6 million in 2021.
I consider the members an asset because each of them pays $60 or $120 a year for the privilege of shopping at Costco. I calculate Costco could generate $6.696 billion a year if each member buys a $60 Gold Star Membership. Note: I believe the actual number is higher because many of those members …….