It may not be the most wonderful time of the year for retailers, but the back-to-school shopping season comes in a close second. Back-to-school shopping isn't just about pencils, backpacks, electronics, and sneakers; it's a key retail event that signals consumer health heading into year-end.
Zacks.com users have recently been watching Costco (COST) quite a bit. Thus, it is worth knowing the facts that could determine the stock's prospects.
Retail stocks' earnings season has started, and one theme investors will hear repeatedly is the state of the consumer. The Federal Reserve's campaign to raise interest rates has widened the gap between low- and middle-income consumers and high-income consumers.
Since 2020, shares of Costco Wholesale (COST -2.55%) have risen by 230%. It has been one of the best retail stocks to own in recent years.
In the most recent trading session, Costco (COST) closed at $994.57, indicating a +1.4% shift from the previous trading day.
Costco remains a resilient defensive play with strong customer loyalty and an essentials-focused business model, ideal for uncertain macro environments and consumer spending cuts. Valuations are reasonable versus historical averages, especially compared to Walmart, limiting downside risk but also capping near-term upside potential. Business fundamentals are solid: robust e-commerce growth, strong membership renewals, and healthy gross margins despite macro and tariff headwinds.
Costco's value-based model and strong execution continue to drive market share gains, even amid economic uncertainty and high prices. International expansion and e-commerce growth remain significant, underappreciated catalysts for future revenue and margin improvement. The company's robust balance sheet, disciplined buybacks, and resilient free cash flow provide financial flexibility for shareholder returns.
In the closing of the recent trading day, Costco (COST) stood at $978.85, denoting a -1.25% move from the preceding trading day.
COST's robust growth and loyal membership base keep it strong, but its lofty valuation may call for patience from investors.
I reiterate my Buy rating on Costco Wholesale Corporation with a fair value of $1,108 per share, driven by robust membership and Kirkland Signature brand growth. Costco's Q3 FY25 results showed 8% revenue growth and strong comparable sales, with Kirkland Signature outpacing overall growth, especially in a weak economy. Membership fee income rose 11.4%, and e-commerce maintained mid-teen growth, supporting my forecast of 7% near-term SSS growth.
Eric Clark, Accuvest Global Advisors CIO, joins 'Power Lunch' to discuss Clark's thoughts on Costco, other names in the consumer sector and much more.
The recommendations of Wall Street analysts are often relied on by investors when deciding whether to buy, sell, or hold a stock. Media reports about these brokerage-firm-employed (or sell-side) analysts changing their ratings often affect a stock's price.