Core Insights - Costco operates membership warehouses offering a wide range of branded and private-label products, benefiting from a low-margin, high-volume business model that drives strong sales growth and customer loyalty [1][2] Business Model and Operations - The company has over 870 warehouses globally and is expanding its e-commerce platform, leveraging scale efficiencies, membership fee growth, and disciplined cost control [2] - Costco's subscription-based model generates recurring revenue and stable cash flows, while its limited SKU strategy enhances inventory turnover and pricing power against competitors [2] Financial Analysis - Discounted Cash Flow (DCF) analysis indicates forecasted free cash flows (FCF) growing from $7.8 billion in 2025 to $9.8 billion in 2029, with a total present value of FCFs at $33.5 billion [3] - The terminal value, calculated using a perpetuity growth model, is estimated at $144.2 billion, leading to a present value of the terminal value of $92.8 billion [3] - The enterprise value is calculated at $126.3 billion, factoring in net cash of $7.2 billion, resulting in an equity value of $133.5 billion [4][5] Valuation - The intrinsic value per share is estimated at approximately $301, while the current market price is around $890.60, indicating a margin of safety of -66% [5] - Despite Costco's strong free cash flow growth and brand loyalty, shares are trading well above intrinsic value, suggesting that long-term investors may want to wait for a more attractive valuation before making investment decisions [5]