Comparable Company Analysis: Walmart, Target and Costco

Step 1:Choose peers and identify the differences

Walmart, Target and Costco overlap in groceries and general merchandise, stores and online sales. They are useful retail comparators, but a margin difference does not automatically mean one company operates better.

Costco's membership model is particularly important. In fiscal 2026, it reported membership-fee revenue of $5,907 million and operating income of $11,685 million. Membership fees are therefore equivalent to approximately half of operating income. That is a comparison of two reported amounts, not proof that membership fees generate half its operating profit: the filing does not allocate all associated costs to that revenue stream.[1]

Geography, product mix, fuel sales, advertising and membership revenue also affect the comparison. Record those differences alongside the financial table.

Step 2:Bring the reporting periods closer together

The latest annual reports cover different year ends. Walmart and Target finish in January; Costco finishes in August.

For Walmart and Target, update the annual figures using:

This substantially reduces the timing difference, but does not produce identical dates. Costco still ends 29 days after Target and 30 days after Walmart. Call these closely aligned trailing periods, rather than exactly the same twelve months. Exact calendarization to a common date would require finer-period information or clearly labelled estimates.

For Walmart, the calculation is:[2][3]

Walmart separately reports trailing D&A of $15,094 million in its return-on-investment reconciliation. The $1 million difference arises when rebuilding the measure from the rounded annual and interim amounts. This example consistently uses the reconstructed $15,093 million; the difference does not affect the margins rounded below.

Target's equivalent calculation is:[4][5]

Costco's annual figures are revenue of $303,154 million, operating income of $11,685 million and D&A of $2,674 million.[1]

Using the same EBITDA definition gives:

The updated EBITDA amounts are 7.6% higher for Walmart and 11.5% higher for Target than their January annual figures. These are changes between reporting windows, not growth caused by the calculation itself.

Step 3:Build an adjustment ledger before adjusting earnings

A company's own "adjusted" result is useful evidence, but it does not establish a consistent policy across peers. Record each potential adjustment, where it appears in the accounts, and whether its effect is sufficiently quantified.

The tariff refunds illustrate why the full filings matter:

Sources: Walmart's July 2026 10-Q, Target's August 2026 10-Q and Costco's fiscal 2026 10-K.[3][5][1]

Gross refunds and the benefit retained after price reductions are different measures. Removing the gross refund while retaining the associated price-investment costs answers a different question from estimating earnings without either effect. Show the chosen treatment explicitly.

There are other candidate adjustments too:

• Walmart: its disclosed operating-income adjustments produce a net $748 million expense add-back over the reconstructed trailing period, as reconciled below. These are management-defined adjustments, not automatic evidence that every amount should be excluded from a peer comparison.[6][7]
• Target: fiscal 2025 (year ended 31 January 2026) includes $250 million of business-transformation costs: $129 million of severance, $57 million of lease-termination costs and $64 million of impairment and other costs. Target names this year for the calendar year in which it begins; Walmart calls the year ending on the same date fiscal 2026. These costs must be considered when reviewing the trailing-period adjustments. A policy addressing Walmart's reorganization costs must also assess Target's, including the relevant period and any overlap with amounts already added back in D&A.[4][5]
• Target's earlier settlement: the $593 million interchange-litigation gain is included in both the annual figure and the prior-year first half, so it cancels out of the trailing calculation.[5]

Walmart's $748 million bridge follows the same annual-plus-current-YTD-minus-prior-YTD method:[6][7]

For each proposed adjustment, check that it belongs to the selected period, affects the earnings measure being used, and has not already been removed or added back. Keep estimates separate from disclosed amounts. An after-tax EPS effect cannot be deducted directly from pre-tax EBITDA.

Step 4:Calculate ratios using the stated definitions

Revenue and D&A need as much attention as unusual items.

Read what revenue includes. Walmart's total revenue includes membership and other income. Costco's combines net sales and membership fees. Target calls its total "Net Sales," but that figure already includes advertising, membership and other non-merchandise revenue. A matching caption is not enough; neither is a different caption proof of a different definition.[1][2][5]

Check the complete D&A amount. Target's fiscal 2025 cash-flow statement (year ended 31 January 2026) reports $3,134 million, compared with $2,617 million in the separate income-statement D&A line. Using that income-statement line alone would omit $517 million, including depreciation within cost of sales.[4]

The cash-flow reconciliation is a useful source, but its contents still need checking. Do not automatically treat every noncash adjustment as depreciation or add an amount back twice.

For valuation multiples, use enterprise values measured on the same date, consistent debt and cash definitions, and earnings with the same treatment of adjustments and leases. Holding enterprise value constant, increasing EBITDA lowers EV/EBITDA mathematically. That alone does not establish that a company is undervalued.

Step 5:Make the table reviewable

Keep four things with the finished comparison:

1. Source amounts: the filed figures, their periods and units.
2. Calculations: the annual and interim bridge used to construct each trailing period.
3. Adjustments: the amount, source, treatment and any unresolved limitation.
4. Comparability notes: remaining differences in dates, business model and accounting presentation.

The result is a table a reviewer can reproduce, with judgments visible rather than hidden inside a single "cleaned" number.

Final master comps table: reported basis

The figures, periods and open adjustment questions come together in one reviewable view. Amounts are USD millions; EBITDA is calculated as operating income plus D&A, with no analytical adjustments applied in this table.

The periods are closely aligned, not identical. Walmart's reconstructed D&A uses the rounded-input basis explained in Step 2. The separate tariff-only example in Step 3 is an analytical scenario and is not substituted into this reported-basis table.