How Does The Smart Money View Costco?

With a forward P/E of 25 and a dividend yield of 1.11%, Costco seems overvalued, especially compared to Wal-Mart (NYSE:WMT)’s forward P/E of 13.4 and dividend yield of 3%. Therefore, it’s not surprising why Warren Buffett and other top investors like Wal-Mart more (65 funds from our database disclosed long positions as of the end of June). The actual results, however, show that Costco is a good holding, as shares of the wholesaler are up 5.5% year to date versus Wal-Mart’s 24% decline. Costco has substantial costs it could cut but doesn’t. The company runs itself for the long run and not for the next quarter, which explains the four straight quarters of mixed results.

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