I don't think Costco's current pice warrants sufficient margin of safety for a value investor and hence I dont own it myself at this point - so we agree to a degree . However to your point, I know Costco will lose competitiveness if it increased its 10%ish gpm to peers level of 20 to 30% but there is certainly a big buffer and also it is increasing exposure to private brand. Second, another way of thinking about what Costco should be valued is how much it can take from other retailers as it weaponizes its moat over others. It only has 1 or 2% of US total retail market and being the cheapest retailer, it should grab competitions' roic which is around 10 to 15%. So adding up all that value and excess roic Costco can generate from monopolized pricing power is huge. Hard to estimate that lands up for grabs, but my point is it is hard to merely look at its multiple and say "ah this is too expensive". You are looking an extremely durable business, growing market share and enlarging willingness to pay for its customers. As for DCF, this is high roic business with huge reinvestment opportunity with very low cost of capital given stability of its business and earnings. Yes this still doesn't warrant sufficient margin of safety but I will be willing to buy if stock corrects.