What Costco's Balance Sheet Says About Its Financial Strength

Core Insights - Costco Wholesale Corporation demonstrates a strong financial position with significant liquidity and effective asset management, reporting $13,836 million in cash and cash equivalents as of May 11, 2025, an increase from $9,906 million on September 1, 2024 [1][9] Financial Performance - The company generated $9,468 million in operating cash flow over the first 36 weeks of fiscal 2025, while managing financing outflows effectively, maintaining a strong net cash position despite $1,030 million in dividends and ongoing share repurchases [2] - Merchandise inventories reached $18,606 million, indicating efficient turnover practices, with total current assets of $38,151 million comfortably covering current liabilities of $37,579 million, reflecting healthy working capital [3] Debt and Equity - Costco's long-term debt stands at $5,717 million, which is modest compared to total assets of $75,482 million, and equity has increased to $27,125 million from $23,622 million, showcasing the company's ability to finance expansion internally [4][9] Strategic Positioning - The balance sheet supports Costco's ability to navigate macroeconomic challenges and invest in warehouse expansion and digital initiatives, characterized by strong liquidity, minimal debt, and growing equity [5] Comparative Analysis - BJ's Wholesale Club reported $39.5 million in cash and equivalents and a working capital shortfall with $2,510.4 million in current liabilities, while Target Corporation had $2,887 million in cash but also faced a working capital deficit with $18,991 million in current liabilities, highlighting Costco's superior financial strength [6][7] Stock Performance and Valuation - Costco's stock has outperformed the industry, with a 14.7% increase over the past year compared to the industry's 8.3% growth [8] - The forward 12-month price-to-earnings ratio for Costco is 47.38, significantly higher than the industry average of 31.67, indicating a premium valuation [10] Growth Estimates - The Zacks Consensus Estimate projects year-over-year growth of 8.1% in sales and 11.6% in earnings per share for the current financial year [11] - Current quarter sales are estimated at $85.83 billion, with a year-over-year growth estimate of 7.70% [14]