§ 02The Costco DCF · explicit cash flows

A consumer-staples retailer with 8% revenue CAGR and stable margins is the easy case for a DCF. We start from FY2025 reported figures and fade growth from 8% to a 2.5% terminal rate over a 10-year horizon. Capex stays at ~2% of revenue (membership-warehouse model is capital-light by retail standards).
FCFF projection · Costco FY26–FY35 ($B)
YearRevenueGrowthOp marginEBITNOPAT+ D&A– Capex– ΔNWCFCFF
FY25A275.28.2%3.77%10.47.82.3(5.5)(0.4)4.2
FY26E297.28.0%3.85%11.48.62.5(5.9)(0.5)4.7
FY27E319.57.5%3.90%12.59.42.7(6.4)(0.5)5.2
FY28E341.36.8%3.95%13.510.12.9(6.8)(0.4)5.8
FY29E361.45.9%4.00%14.510.83.1(7.2)(0.4)6.3
FY30E379.45.0%4.05%15.411.53.3(7.6)(0.3)6.9
FY31E394.64.0%4.10%16.212.13.5(7.9)(0.3)7.4
FY32E406.43.0%4.10%16.712.53.6(8.1)(0.2)7.8
FY33E414.52.0%4.10%17.012.73.7(8.3)(0.2)8.0
FY34E422.82.0%4.10%17.313.03.8(8.5)(0.2)8.2
FY35E (TY)433.42.5%4.10%17.813.33.9(8.7)(0.3)8.3
Cumulative undiscounted FCFF (FY26–FY35)68.7

Operating margin fades upward modestly (3.8% → 4.1%) reflecting Kirkland mix, e-com leverage, and capped membership-fee growth. Capex stays at ~2% of revenue. Fade pattern is canonical for mature retailers — front-loaded growth, steady-state by year 6.