Buffett Brain · Research note
Score updated 21 Oct 2026 · analysis from 1 Jun 2026
COST· Consumer Staples
Costco
A wonderful retailer with a fortress balance sheet, priced at 48 times earnings as if it were a software company.
Buffett fit
Partial fit
Owner
32
Durability
92
Management
76
Price
0
Score updated 21 Oct 2026 · analysis from 1 Jun 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Consumer Staples stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
If I owned the whole company at this price, I would be paying roughly 48 times earnings for the privilege, which means an earnings yield of about 2.1 percent.
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This is where Costco shines. The durability score of 92 is no accident.
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Management has run this place sensibly. sits at 19 percent on a trailing basis and 20.2 percent over five years, is a conservative 0.17, and interest is covered nearly 77 times over.
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There is none, and I will not pretend otherwise. At a of 48 and an owner-earnings yield of just 1.85 percent, you are paying a premium price for a slow-growing retailer and counting on the multiple never coming down.
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
7- 1Bulletproof durability, scored 92, with zero EPS decline in the measured window and revenue at 8.9 percent.
- 2High returns on capital, with trailing of 19 percent and a five-year ROIC of 20.2 percent.
- 3A fortress balance sheet, with of just 0.17 and net debt to EBITDA actually negative at minus 0.92.
- 4Interest covered nearly 77 times, so there is essentially no risk of financial distress.
Concerns
7- 1The price is the whole problem: 48 times earnings and an EV to of nearly 40 for a 3.8 percent-margin retailer leaves no , and the valuation score is zero.
- 2The owner-earnings yield of 1.85 percent is below what a risk-free Treasury pays, so you are accepting business risk for a worse return.
- 3The score of just 32 says the durable edge is scale and habit, not anything that lets it raise prices freely, by design margins stay thin.
- 4 of only 3.8 percent means a small misstep on costs or shrink hits profits hard.
Price history
$995+106.4%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Costco does not really make its money selling goods. It runs at a razor-thin 3.8 percent and a 12.9 percent , deliberately giving the savings back to members so they keep coming. The real profit engine is the annual membership fee, a high-renewal subscription that drops almost straight to the bottom line and lets the company compound earnings at a 12.7 percent clip.
How this analysis has moved
The call has held across 5 reviews.
Sep 27, 2026 → Oct 21, 2026
What other investors would say
The same company, judged by three other documented playbooks.
Keep researching
Similar companies in Consumer Staples
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