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PLEASE SEE ANALYST(S) CERTIFICATION(S) ON PAGE 4 AND IMPORTANT DISCLOSURES BEGINNING
ON PAGE 6
Costco is currently trading at 19.2x our revised FY09 EPS estimate of $2.50 and 18.5x our FY10 EPS estimate of $2.60. Costco continues
to operate some of the most productive stores across all of retail and we expect Costco to continue expanding its store base. The company
maintains a strong balance sheet and we expect the company to continue its dividend payments, and as well as potentially continue share
repurchases. Our price target of $50 reflects 19.2x our 2010 EPS estimate of $2.60.
May 28, 2009
Costco Wholesale Corp. (COST - US$ 47.97) 2-Equal weight
Earnings Review/Sales Analysis
Review of 3Q09
Costco reported 3Q09 EPS of $0.52 excluding a
$34 mm litigation charge, vs. our $0.48 estimate.
Sales declined (4.8)% to $15.48 B as total comps
fell (7)%. Excluding both gas and FX, total comps
for the quarter increased 2%. Despite a decline in
average transaction, average traffic remained in
line with recent trends with a 4.5% increase.
Excluding $27 mm in litigation charges, MFI
increased 1.3% to $355.4 mm. Excluding FX, MFI
would have increased ~6%. During the quarter,