Earnings Analysis for COST (Last 3 Years)
Revenue Analysis
Total and Operating Revenue: COST’s total revenue showed a significant upward trend, from $55.27 billion in 2023 to $58.44 billion in 2024. This suggests a consistent growth in the company’s ability to generate sales across the given periods. Operating Revenue mirrors the Total Revenue, indicating that the majority of revenue is generated from the company’s core operations.
Gross Profit Margins: Gross profit has risen from $6.84 billion in 2023 to $7.30 billion in 2024, correspondingly improving the Gross Profit margin slightly. This reflects better management in either pricing strategies or cost of goods sold.
Cost Management
Cost of Revenue: The Cost of Revenue has been increasing but is proportionate to the rise in revenue, maintaining a consistent ratio that suggests stable cost management strategies despite scale increases.
Operating Expense and Total Expenses: Operating Expenses remained relatively stable around $5.24 billion from 2023 to 2024. However, Total Expenses saw a considerable increase from around $53.36 billion to $56.38 billion, which may be attributed to scaling operations and possibly inflationary pressures.
Profitability Analysis
EBITDA: Earnings before interest, taxes, depreciation, and amortization (EBITDA) saw growth from $2.49 billion in 2023 to $2.79 billion in 2024, indicating improved operational efficiency.
Operating and Pretax Income: Operating Income increased from $1.90 billion to $2.06 billion, while Pretax Income grew more notably from $1.98 billion to $2.24 billion over the respective period, showing improved profitability before tax obligations.
Net Income: The Net Income available to shareholders has shown a robust increase from $1.47 billion to $1.74 billion, marking substantial growth in profitability.
Cash Flow Indicators
Reconciled Depreciation: Depreciation expenses have increased from $470 million to $514 million, indicating increased capital asset usage which aligns with rising operational scale.
Interest Expense: Despite the overall growth, COST has managed to maintain or slightly increase its interest expenses, indicative of stable debt management.
Taxation
Tax Rate: The effective tax rate has seen fluctuations but remains around 22-24%, within a standard range for large corporations in the retail sector.
Tax Provision: The tax provision has stepped up in line with pretax earnings, moving from approximately $517 million to $494 million, keeping pace with income growth.
Tax Effect of Unusual Items: Minimal effects noted, suggesting few non-recurring or extraordinary items impacting the tax scenario.
Shareholder Metrics
Diluted and Basic EPS: Both metrics have shown improvements (EPS rising from 3.3 to 3.92 in the diluted measure), which is a good signal for shareholders concerning profitability per share.
Average Shares: The number of shares outstanding has remained stable, ensuring that the increase in EPS is not due to reduced share counts but genuine growth.
Net Income Available to Common Stockholders: This has mirrored the Net Income growth, pointing to strong shareholder returns.
Conclusion
COST has demonstrated solid revenue growth, improved profitability, and efficient cash flow management over the analyzed period. The consistent improvement across key financial metrics highlights the company’s adeptness in handling expansion, cost control, and profitability enhancement. Investors should view these trends positively with consideration for potential consistent future growth.