Renewal rates have been at record levels as customers rely on Costco’s prices in the inflationary environment. U.S. and Canada rates were 92.6% in the third quarter, while global rates were 90.5%. The quarter ended with 69.1 million paid household members and 124.7 million cardholders, both 7% higher than last year. Costco Wholesale (COST 1.12%) has been posting comparable sales declines for the first time in years, yet its stock continues to climb (up 23% this year). There’s good reason for investor confidence despite the harsh environment and suffering performance.

• Since reaching that all-time high, the shares have fallen by 13%, compared to a modest 2% decline for the broader market.
• The Price family eventually exit the business in favor of new operations resulting in the rebranding to Costco Wholesale Corporation.
• Costco is well-known as a place to get bargain prices on any variety of items, from food to luggage to appliances to gold bars.
• Third, Costco is one of many retailers that will benefit from an ongoing shakeout in home furnishings retail.

In the last five years, revenue and diluted earnings per share have increased at compound annual rates of 11% and 15%, respectively, a superb performance that has propelled the stock price. But the retailer is dealing with a bit of a slowdown following double-digit revenue growth in the past two fiscal years. Investors might be ready to sell their shares given the uncertain macro environment, even though the company has a stellar track record. This Program is available to both present shareholders of record as well as to individual investors wishing to make an initial purchase of Costco common stock.

Information is provided ‘as-is’ and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see Barchart’s disclaimer. The company operates through a network of subsidiaries that own warehouses in 11 countries, including the US and Puerto Rico. The company retails branded and private-label merchandise across verticals and categories and at “discounted” or bulk-rate prices. Product categories include grocery and frozen foods, apparel, sporting goods, electronics, auto care, appliances, housewares and even furniture.

Analyst Ratings

The chickens are sold for less than cost and used to attract business into the store. Regardless of the price, gold is selling like hotcakes, judging by comments Tuesday from Costco Chief Financial Officer Richard Galanti. Speaking on the company’s quarterly earnings call, Galanti said the bars are in hot demand and don’t last long when in stock. The membership fee is an integral part of the business model. Costco stock isn’t cheap, trading at a forward P/E ratio of nearly 35.

Notably, COST stock had a Sharpe Ratio of 0.9 since early 2017, which is higher than the figure of 0.6 for the S&P 500 Index over the same period. Compare this with the Sharpe of 1.2 for the Trefis Reinforced Value portfolio. Sharpe is a measure of return per unit of risk, and high-performance portfolios can provide the best of both worlds.

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Adam Levine-Weinberg has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. Over the past three years, the company’s dividend has grown by an average of 11.47% per year. To access even more pertinent information, you can visit our Investor Relations page.

Markets

Other services include delivery, travel and curbside pickup. As of the year-end calendar 2022, the company operated more than 840 stores and was on track to open new stores in the how to buy cred coming years. Total revenue in 2022 topped $226 billion, the company employs more than 304,000 individuals and it is a member of the S&P 500, the S&P 100 and the NASDAQ 100.

“I’ve gotten a couple of calls that people have seen online that we’ve been selling 1 ounce gold bars,” he said. “Yes, but when we load them on the site, they’re typically gone within a few hours, and we limit two per member.” They’re available for the bargain price of … well, you have to be a member to know that, but apparently they were selling for a little shy of $1,900 recently, according to chatter on Reddit. Spot gold most recently was going for $1,876.56 an ounce as of Wednesday afternoon.

Join Over Half a Million Premium Members Receiving…

Not just anyone can shop at one of the company’s 852 warehouses. The basic membership plan costs $60 a year, a small amount to pay for access to some of the lowest prices around. Customers love Costco, as represented by its members’ worldwide renewal rate of 90.5%, an all-time high. After all, sales growth is moderating after several years of torrid growth, and Costco stock had nearly doubled in the 13 months before it reached its all-time high. Nevertheless, several key catalysts could launch the shares past $600 to new all-time highs in 2024.

You could wait for a pullback, but you can’t time the market, and Costco’s long-term growth story looks strong enough to warrant a buy even at this price. Costco ended last quarter with $13.7 billion of cash and short-term investments. It could easily afford to pay a special dividend of around $15 per share, which would wma vs ema represent a total cash outlay of $6.7 billion. That would help remind investors of the company’s consistent cash-generation capabilities. Finally, Costco’s rising cash balance could lead the company to pay a special dividend to investors soon. It pays a very modest regular dividend, which currently yields less than 1%.

Costco Wholesale Corp. Past Events

Nearly 70% of the stores are located in the US with another 13% in Canada and the remainder scattered around the globe. Costco has raised its membership fee on average every five years and seven months. That would have placed the next raise a few months ago already.

But with adjusted comp-sales growth likely to reaccelerate later this year and other catalysts in sight, the shares still look primed to reach new highs beyond $600 in 2024. A $5 increase in the basic membership fee (and $10 increase for executive members) in the U.S. and Canada would lift Costco’s bottom line by hundreds of millions of dollars annually. That would provide a meaningful boost to earnings growth over the next two fiscal years. In addition to retail, the company also provides many services including pharmacy, eye care, food & beverage and auto care centers. The company also operates more than 665 gas stations across its footprint and a robust eCommerce channel.

Sales growth could reaccelerate

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data. One share of COST stock can currently be purchased for approximately $571.31. It was among the very first warehouse membership clubs and targeted small merchants and businesses. The Price family turned down an offer to merge with Walmart’s Sam’s Club in favor of a more suitable match-up with Costco.

Costco is posting modest growth right now due to two related stresses on the business. Costco can still surprise investors with good news, though, as it did in its late September fourth-quarter earnings report. COST’s FQ earnings per share is expected to be $4.77 per Trefis analysis, almost matching the consensus estimate.