Costco Wholesale Corporation (COST), headquartered in Issaquah, Washington, engages in the operation of membership warehouses. With a market cap of $435.2 billion, the company sells all kinds of food, automotive supplies, toys, hardware, sporting goods, jewelry, electronics, apparel, health, and beauty aids, as well as other goods.
Companies worth $200 billion or more are generally described as “mega-cap stocks,” and COST definitely fits that description, with its market cap exceeding this threshold, reflecting its substantial size, influence, and dominance in the discount stores industry. Costco differentiated itself in the crowded retail space through its membership-only model, offering bulk purchases at discounted prices and exclusive private-label products, fostering customer loyalty and driving business success.
Despite its notable strength, Costco shares touched their 52-week high of $991.15 in the last trading session. Over the past three months, COST stock gained 11.3%, outperforming the S&P 500 Index’s ($SPX) 10.3% gains during the same time frame.
In the longer term, shares of Costco rose 50.1% on a YTD basis and climbed 65.4% over the past 52 weeks, outperforming SPX’s YTD gains of 27.6% and 33.2% returns over the last year.
To confirm the bullish trend, COST has mostly traded above its 50-day moving average since early August, with slight fluctuations. It has traded above its 200-day moving average over the past year.
Costco's success can be attributed to its membership-based model, offering quality goods at competitive prices to drive customer loyalty and recurring revenues. The company's efficient supply chain, bulk purchasing power, and curated product selection make it a dominant player in the warehouse retail sector. With high membership renewal rates and global expansion efforts, Costco continues to grow its customer base and market presence. Additionally, its digital and e-commerce initiatives are contributing to overall sales growth.
On Sep. 26, COST shares closed down marginally after reporting its Q4 results. Its adjusted EPS increased 8.8% year over year to $5.29. The company’s revenue was $79.7 billion, missing Wall Street forecasts of $79.8 billion.
In the competitive arena of discount stores, Walmart Inc. (WMT) has taken the lead over Costco, showing resilience with a 79.7% uptick on a YTD basis and a solid 83.6% gain over the past 52 weeks.
Wall Street analysts are moderately bullish on COST’s prospects. The stock has a consensus “Moderate Buy” rating from the 33 analysts covering it. While COST currently trades above its mean price target of $949.29, the Street-high price target of $1075 suggests an upside potential of 8.5%.
