COST – Market expectations are for new-high Uniform ROA, but management may have concerns about gasoline business, inventory, margins

• Costco (COST) currently trades above corporate averages and at a historical high relative to Uniform earnings, with a 37.2x Uniform P/E (Fwd. V/E’).
  
• At these levels, markets are pricing in expectations for Uniform ROA to reach a new high of 27%, accompanied by 5% Uniform asset growth.
  
• Meanwhile, analysts expect Uniform ROA to remain at 17% levels through 2023, accompanied by 4% Uniform asset growth.
  
• If sustained going forward, these levels would imply a stock price closer to $292, representing approximately 42% equity downside for the firm.
  
• Moreover, the firm’s most recent earnings call suggests management may have concerns about their gasoline business, inventory management, and margins.