Costco Wholesale Corporation (COST) vs Target Corporation (TGT)

Costco Wholesale Corporation and Target Corporation are both Discount Stores companies. Costco Wholesale Corporation is the larger, with a market value of $396.7B against $72.5B — 5.5× the size. Target Corporation trades at the lower P/E: 16.3× against 46.3×. Costco Wholesale Corporation grew revenue faster over the last twelve months: 9.23% against 1.95%. Target Corporation has the higher net margin (4.08% vs 3.01%) and the lower return on invested capital (13.6% vs 36.6%). Both pay a dividend; Target Corporation yields more (2.91% vs 2.58%). Across the 23 metrics below, Target Corporation leads on 13 and Costco Wholesale Corporation on 10.

Valuation

Metric COST TGT Discount Stores median
P/E 46.30 16.27 19.55
P/S 1.39 0.66 1.08
P/B 12.21 4.01 5.43
Price to free cash flow 46.47 16.06 33.31
EV/EBITDA 28.65 8.86 12.17
EV/Sales 1.35 0.76 1.06
Earnings yield 2.16% 6.15% 3.95%
Free cash flow yield 2.15% 6.23% 2.93%

Profitability

Metric COST TGT Discount Stores median
Gross margin 12.88% 29.30% 27.27%
Operating margin 3.82% 5.59% 4.45%
Net margin 3.01% 4.08% 3.01%
Free cash flow margin 3.00% 4.14% 3.30%
Return on equity 29.15% 26.41% 20.83%
Return on assets 10.92% 7.38% 7.60%
Return on invested capital 36.57% 13.55% 13.21%

Growth

Metric COST TGT Discount Stores median
Revenue growth (TTM) 9.23% 1.95% 8.64%
EPS growth (last fiscal year) 9.96% (8.24%) —
Revenue growth, 5-year CAGR 10.54% 2.29% 4.99%
Net income growth, 5-year CAGR 15.14% (3.24%) 0.00%

Health

Metric COST TGT Discount Stores median
Debt to equity 0.17 0.86 0.39
Current ratio 1.07 0.99 1.03
Net debt to EBITDA (0.75) 1.33 0.59

Dividend

Metric COST TGT Discount Stores median
Dividend yield 2.58% 2.91% 2.12%
Payout ratio 0.28 0.59 0.24

Size

Metric COST TGT Discount Stores median
Market cap 396.68b 72.51b 16.44b

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