Based in Issaquah, Washington, Costco Wholesale Corporation (COST) boasts a market cap of $379 billion and operates as a leading retailer in the membership-based warehouse sector. The company provides a wide array of products and services, including groceries, electronics, and gasoline, through its extensive network of physical stores and e-commerce platforms.
Shares of the warehouse club giant have significantly outpaced the broader market over the past 52 weeks. COST has notably gained 52.8% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 19.6%. In 2024, shares of COST are up 29.5%, compared to SPX's 12% gain on a YTD basis.
Zooming in further, COST is also outpacing the Vaneck Retail ETF's (RTH) 10.8% gain over the past 52 weeks and 5.6% on a YTD basis.
Costco Wholesale has outperformed over the past year due to its robust revenue growth and significant gains in eCommerce, supported by a strong membership base and high renewal rates. The company's strategic expansion and competitive pricing on new products like gold and silver have further bolstered its performance.
Moreover, on May 30, the stock rose more than 1% due to stronger-than-expected Q3 revenue driven by increased consumer demand for low-priced discretionary items and groceries, but it pulled back marginally the next day as investors believed the stock’s strong performance had already been factored into the stock price, leading to a lack of surprise or further upward movement after the earnings announcement.
For the current fiscal year, ending in August, analysts expect COST's EPS to grow 8.8% year over year to $15.98. The company's earnings surprise history is promising. It beat the consensus estimates in each of the last four quarters.
Among the 29 analysts covering the stock, the consensus rating is a “Strong Buy.” That’s based on 19 “Strong Buy” ratings, three “Moderate Buys,” and seven “Holds.”
This configuration has remained steady over the past month.
On Aug. 8, Jefferies analyst Corey Tarlowe maintained a “Buy” rating on Costco with a price target of $1,050 - the street-high price target, citing robust performance metrics, including a 7.2% increase in comparable sales and strong growth in traffic and non-food categories. This implies a potential upside of 22.8% from current levels.
The mean price target of $879.38 represents a premium of just 2.9% to COST's current levels.
On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
