Core Viewpoint - Costco Wholesale is positioned for long-term success, with a growing and younger customer base, strong membership renewal rates, and significant revenue growth over the past decade [2][4]. Group 1: Business Performance - Over the last 10 years, Costco has more than doubled its revenue, attributed to new locations and an increase in membership [2]. - The company has nearly 900 locations globally and approximately 137 million members [3]. - Costco added about 9 million new cardholders in fiscal 2024, with roughly half of these members being under 40 years old [3][4]. Group 2: Membership Dynamics - The average age of Costco's members has been steadily decreasing since the COVID-19 pandemic, indicating a shift towards a younger demographic [4]. - Costco's membership renewal rate exceeds 90%, suggesting that many younger members are likely to remain loyal for years [4][6]. Group 3: Investment Considerations - Costco's stock trades at over 50 times its earnings, which is considered high for a low-growth business, indicating potential overvaluation [5]. - Despite the high valuation, the long-term resilience of Costco's business model and customer base may provide comfort to investors concerned about its future [6].

Core Insights - Costco is expanding its precious metals offerings by selling 1-ounce platinum bars and Canada maple leaf platinum coins for $1,089.99 each, available online only [2][5] - The company has seen significant success in its precious metals business, particularly with gold bars, which have generated substantial revenue since their introduction [5][7] - The value of platinum has increased over 15% in the past year, closing at $1,019.60 per ounce, while gold has surged over 45% in the last year and nearly 80% over the past five years, closing at $2,679.90 [5][7] Membership and Sales - Buyers must hold a Costco membership, which costs between $65 to $130 annually, to purchase the platinum bars and coins [5] - The sale of gold bars has reportedly generated up to $200 million in monthly sales for Costco, indicating strong demand for precious metals among its members [7] Restrictions and Policies - The platinum bars and coins cannot be delivered to Louisiana, Nevada, or Puerto Rico, and they are not eligible for returns or refunds [5]

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Core Viewpoint - Costco is expanding its presence in the precious metals market by introducing Swiss-made platinum bars for sale online, following the successful launch of gold bars earlier in 2023 [1][2] Group 1: Product Offerings - The newly introduced 1-ounce platinum bars are priced at $1,089.99 and are available exclusively online, with restrictions on delivery to certain states [1] - Costco's gold bars, launched in August 2023, have seen high demand, often selling out within hours of restocking [2] Group 2: Market Performance - Analysts at Wells Fargo reported that Costco was selling approximately $200 million worth of gold bars monthly as of April 2023 [1] - The value of gold has increased by over 40% in the past year and more than 70% over the last five years, while platinum has seen a 15% rise in the past year but a decline of over 8% since reaching $1,100 earlier in 2024 [2]

Core Viewpoint - Costco Wholesale continues to impress investors with a stock increase of 35% this year, outperforming the S&P 500, despite a slight pullback after fiscal fourth-quarter earnings [1] Group 1: Business Model and Membership - Costco operates a unique retail model that charges membership fees for access to low prices, utilizing warehouse-style stores and minimizing operational costs [2] - The company reports high membership renewal rates, with U.S. and Canada renewals at 92.9% and international renewals at 90.5% for the fiscal fourth quarter [3] - Paid memberships increased by 7.4% to over 76 million, with executive memberships rising by 9.6% to 35.4 million, which significantly contributes to global sales [3] Group 2: Financial Performance - E-commerce sales grew by 18.9% year over year in the quarter, indicating a strong shift towards online shopping [3] - Earnings per share (EPS) rose from $4.86 to $5.29, surpassing analyst expectations, while revenue grew by 1% to $78.2 billion, falling short of analysts' forecasts [3] Group 3: Stock Performance and Valuation - Costco stock has never reached a four-digit price, having split its stock four times since its IPO, with the last split occurring in 2000 [4] - The stock is currently trading at a premium valuation, significantly above its five-year average, reflecting strong investor demand [5] - To reach $1,000 from its current price of nearly $900, Costco stock would need to gain about 12%, a target considered achievable given its recent performance [7]

Core Viewpoint - Costco is facing potential economic challenges due to a looming strike by dockworkers at East and Gulf Coast ports, which could disrupt the supply chain and impact retail operations [1][2]. Group 1: Labor Dispute Impact - A strike involving approximately 45,000 dockworkers across 36 ports is likely to commence, which would have immediate repercussions on the supply chain critical to various businesses, particularly in the retail sector [2]. - The retail industry, especially large-scale general retailers like Costco, relies heavily on maintaining inventory levels, making them particularly vulnerable to disruptions caused by the strike [2]. Group 2: Company Preparedness - Costco's management has expressed confidence in their preparedness for a potential strike, with CEO Ron Vachris indicating that the company has taken measures such as pre-shipping goods anticipated to be in high demand during the holiday season [3]. - Despite these preparations, a prolonged strike could still lead to significant disruptions for Costco and other retailers, affecting shareholders and consumers alike [3].

Costco Valuation and Performance - Costco's stock has surged over 600% in the past decade, driven by new store openings, same-store sales growth, and e-commerce expansion [1] - The stock is considered overvalued with a P/E ratio of 56, double that of the S&P 500 index [1] - Billionaire investors, including Ray Dalio's Bridgewater Associates and Ken Griffin's Citadel Capital, have been selling Costco shares in Q2, indicating concerns over stretched valuation [1][2] Home Depot Analysis - Home Depot is the largest home improvement retailer in the US, but its stock has struggled due to the housing market slowdown and remains below its 2021 peak [3] - The Federal Reserve's rate-cutting cycle, including a 50 basis point reduction, is expected to boost the housing market and home improvement projects, benefiting Home Depot [3] - Home Depot's acquisition of SRS Distribution expands its addressable market by $50 billion and strengthens its vertical integration [4][5] - The stock trades at a P/E ratio of 27, with earnings growth expected to rebound as the housing market recovers [5] Target Analysis - Target has faced challenges from slowing consumer spending and internal issues like theft, but recent improvements in gross margin (27% to 28.9%) and operating margin (4.8% to 6.4%) indicate a positive turnaround [6] - Falling interest rates and controlled inflation are expected to encourage consumer spending, further supporting Target's recovery [6] - Target continues to open new stores and leverages competitive advantages such as its multicategory business model, store-based fulfillment, and curbside pickup program [7] - With a P/E ratio of 16 and expected earnings growth comparable to Costco, Target is seen as a more attractive investment compared to Costco [7]

Costco's Quarterly Performance - Costco's shares declined following a mixed quarterly report, with a slight revenue miss but a strong bottom-line beat [1] - Quarterly earnings increased by +6.1% on +1% higher revenues, with comparable same-store sales up +5.3% in the US and +5.5% in Canada [1] - Discretionary categories like jewelry, furniture, and tires saw double-digit gains, while digital comps surged +19.5% [1] Costco's Valuation and Market Performance - Costco's stock pullback is attributed to its premium valuation after a +34.7% year-to-date gain, outperforming the Zacks Retail sector (+20.3%) and the S&P 500 (+20.5%) [2] - The stock trades at 50.8X forward 12-month EPS estimates, significantly higher than its 5-year median of 35.9X [2] Q3 Earnings Season Overview - Costco's fiscal Q4 results are included in the Q3 earnings season tally, alongside companies like FedEx and Oracle [3] - 14 S&P 500 members have reported Q3 results, with earnings up +26.8% year-over-year on +3.4% higher revenues [3] - 71.4% of companies beat EPS estimates, and 78.6% beat revenue estimates [3] S&P 500 Earnings Trends - S&P 500 Q3 earnings are expected to grow +3.34% year-over-year on +4.5% higher revenues, following +10% earnings growth in the previous quarter [7] - Earnings estimates for Q3 2024 have been revised down more significantly than in recent periods, with 14 out of 16 Zacks sectors seeing downward revisions [8] - Despite negative revisions, aggregate earnings for Q3 are expected to reach a new all-time quarterly record [9] Tech Sector and Magnificent 7 Performance - The Tech sector is expected to see Q3 earnings growth of +11.6% on +10.7% higher revenues [12] - The Magnificent 7 (Mag 7) companies are expected to contribute +17.2% earnings growth and +13.6% revenue growth in Q3, accounting for 21.4% of all S&P 500 earnings [10][11] - Excluding the Mag 7, S&P 500 earnings would be flat year-over-year [11] Long-Term Earnings Outlook - S&P 500 earnings are expected to grow +7.7% in 2024, improving to +9.6% excluding the Energy sector [10] - Double-digit earnings growth is projected for 2025 and 2026, with the Tech sector maintaining robust growth momentum [9][13]

Costco Wholesale Corporation (COST) posted its fourth-quarter fiscal 2024 results, with earnings surpassing the Zacks Consensus Estimate but revenues falling short of the same. Both the metrics showed year-over-year growth. Comparable sales also increased, though the pace of growth moderated compared to the preceding quarter. This can be attributed to the cautious consumer spending environment and lower gasoline prices.Costco’s Quarterly Performance: Key Metrics and InsightsCostco reported adjusted earnings ...

An apparent tailwind hit yesterday's value stocks, a new development seen in the declining shares of Costco Wholesale Co. NASDAQ: COST after the company released its latest set of quarterly earnings this week. Costco stock is now down over 2% after the report, a bearish sentiment that comes despite the Federal Reserve (the Fed) recently cutting interest rates by the most since the 2008 financial crisis.However, some investors argue these rate cuts might have been priced into stocks like Costco and Walmart I ...