Problem - The following are some key accounting numbers and market values (in thousands) for Target Corporation and Wal-Mart Corporation for 2014 (year ending in 2015) from Yahoo Finance. These two retailers are considered to be comparable to Costco, Inc.
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$ thousands
|
Year
End
|
Sales
|
Earnings
|
Book Value
|
Market
Value
|
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Target Corporation
|
1/31/2015
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$72,618,000
|
($1,636,000)
|
$13,997,000
|
$51,700,000
|
|
Walmart Corporation
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1/31/2015
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$485,651,000
|
$16,636,000
|
$76,255,000
|
$233,100,000
|
Required:
a) Calculate price-to-sales, price-earnings (P/E) and price-to-book (P/13) ratios for Target and Wal-Mart.
b) Costco reported the following numbers (in thousands) for fiscal year 2014:
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$ thousands
|
Year End
|
Sales
|
Earnings
|
Book Value
|
|
Costco, Inc.
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8/31/2014
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$112,640,000
|
52,058,000
|
$12,303,000
|
Apply multiples for Target and Wal-Mart to price Costco's 439.49 million outstanding shares. Is it a "good" buy? The current price of Costco is $137.95 as of 6/16/15.