This score-card analysis attributes an Overall Score to a company by analyzing several aspects that I consider to be among the most important.
In summary, a company to have an overall score close to 100% must have the following characteristics:
- Report high growth rates in the last 3 years (and in the last quarter) in terms of Revenue, Gross Profit, Operating Income and Net Income. Furthermore, it must operate with high and improving margins in recent years.
- Analysts expect Earnings Per Share (EPS) and revenues to grow in the short term (in the next quarter) and in the medium to long term (in the next 5 years). Moreover, they expect the company to be undervalued at current prices and in the last quarter their EPS expectations must have been beaten with a consequent rise in share prices.
- The stock price of the company must have outperformed the S&P 500 index and in the last 3 months the Hedge Funds and Insiders bought shares in the company.
The overall score ranges from 0% (if the characteristics listed above are all very negative) to +100% and it is unlikely that there will be a company with a +100% score because the requirements for achieving this score are very high, however a score higher than +70% can be considered good.
This analysis alone is not enough to decide whether or not to invest in a company because it does not provide indications on the timing of entry, but it is a good starting point.
Costco Wholesale Corp (COST)
- Overall Score: +69,4%
- Each area has a high score, around 70%, a sign that the company is good from all points of view
- Currently analysts consider it slightly undervalued, but expect an annual EPS growth of 7,2% for the next 5 years.
- Costco outperformance compared to the S&P 500 index since the beginning of the year
- Costco has grown over the past 3 years
- Revenues + 28,6% and Net Income + 50,6% with an improvement in the net margin of +17%.
- Good growth also in the last quarter
- Revenues + 7% and Net Income + 9,8% with a slight improvement in the net margin (+ 2,7%)
- Hedge funds have purchased 98k shares in the last quarter
Costco Wholesale Corporation, doing business as Costco, is an American multinational corporation which operates a chain of membership-only warehouse clubs.
The overall score of COST is 69% .
In the last 6 months, COST has overperformed the S&P500 index by 21,0% and analysts believe the company is undervalued by 1,3% .
In the last quarter, the company reported revenues of 47498 million, up by 7,0% compared to the same quarter 12 months earlier. Revenue TTM (Trailing-12-Months) are equal to 152703 million, up by 28,6% in the last 3 years.
COST reported an operating income of 1463 million in the last quarter, an improvement of 1,2% compared to the same quarter 12 months earlier, also reporting a reduction by -5,4% in the operating margin. Considering the sum of the last four quarters (TTM), COST reports an operating income of 4737,0 Million , a growth of 29,0% compared to three years ago and an improvement of 0,3% in the operating margin.
COST reported a net income of 1139 million in the last quarter, an improvement of 9,8% compared to the same quarter 12 months earlier, also reporting an improvement of 2,7% in the net margin. The TTM net income is 3538 million , a growth of 50,6% compared to three years ago and the net margin has improved by 17,0% .
In the next quarter, analysts expect growth in EPS (Earnings Per Share) of 6,2% and a growth in revenue of 6,4% . Furthermore, they expect an annual growth of COST EPS by 7,3% for the next 5 years.
In the last quarter, COST reported better EPS than analysts’ expectations and the stock price reacted by increasing by 0,9% .
Finally, in the last 3 months the Hedge Funds have increased their positions by 98.5k shares. The Insiders have sold shares worth $1.88M .
This analysis gives you a general idea of whether a company is good or not, but you may also be interested in finding potential entry points, so I am waiting for you here to know about the best chart patterns of today.
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Sources & additional info
*The comparison with the S&P 500 index is visible inside the graph.
*Data updated to the last quarterly report available
*Data in Millions of Dollars
*Data from zacks.com, tipranks.com, reuters.com, finance.yahoo.com
*Company information from wikipedia.com
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DISCLAIMER: The information in this blog post represents my own analysis/opinions and does not contain a recommendation for any particular security or investment.