Costco is the real game defender

<Costco is the real game defender>

Not long ago, I posted something about Costco, but I saw that the company's PERs are almost 60 times higher, so is this validation? I started to look for reasons why the PERs soared so close to 60 times, and found that the company is a truly remarkable company with almost every quarter of operating profit growth (Figure shows that since 2015, we have not seen an annual decline in operating profit since 2010)  

There was a belief in the market that Costco would not decrease its profits, and this belief created the valuation re-rating. As shown in the figure, the P/E level was 30 times right before the corona virus, but it increased 40 times through the corona virus, and it exceeded 50 times from the end of last year to the beginning of this year

The stock price is EPSG (EPS growth) * PER (value), and if there is no valuation re-rating, the stock price growth rate should rise by the EPSG value, but the company's stock price steadily rose by 30% every year due to the valuation re-rating, even though the EPSG value is 11.6% based on the CAGR

The basis for the valuation re-rating is that it is an economic defensive channel that has never decreased in annual operating profit since 2010. If a consumer goods company has a P/E of around 60 times, the valuation cannot be said to be cheap, but even so, the company does not seem to have to lose its stock price. This is because there seems to be no reason for the valuation to be de-rated in FY2025. Even if Trump does anything with tariffs, the tariff increase seems to play a role in raising the average ticket price, given that the proportion of grocery, an essential consumer, is over 50% and is a non-competitive member mid-high retail channel

So once again, I think it's great. Personally, I don't think this year's stock price increase is going to be big, but these stocks are companies that make you see the true value of long-term investment, so whenever there's an opportunity...

PS. There are many Korean consumers who ask how it can be done if Costco's stock price rises 30% every year, but the Korean domestic market is the tomb of large supermarkets, so there is no choice but to react like that because it is always broken