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Group 1: Recent Performance - Costco's stock closed at $919.75, reflecting a -0.41% change from the previous day, underperforming compared to the S&P 500's -0.21% loss [1] - Over the past month, Costco shares have decreased by 4.27%, while the Retail-Wholesale sector and the S&P 500 lost 2.84% and 1.56%, respectively [1] Group 2: Upcoming Earnings - Costco is expected to report earnings of $4.07 per share, indicating a year-over-year growth of 9.7%, with projected revenue of $62.85 billion, a 7.55% increase from the same quarter last year [2] - For the full year, analysts anticipate earnings of $18.01 per share and revenue of $272.79 billion, representing changes of +11.79% and +7.21% from the previous year [3] Group 3: Analyst Estimates and Ratings - Recent changes in analyst estimates for Costco are crucial, as upward revisions indicate positive sentiment regarding the company's business operations [4] - The Zacks Rank system, which evaluates these estimate changes, currently ranks Costco as 2 (Buy), with a recent upward shift of 0.25% in the consensus EPS estimate [6] Group 4: Valuation Metrics - Costco has a Forward P/E ratio of 51.28, significantly higher than the industry average of 20.35, suggesting it is trading at a premium [7] - The company has a PEG ratio of 5.51, compared to the Retail - Discount Stores industry's average PEG ratio of 2.24, indicating a higher valuation relative to expected earnings growth [8] Group 5: Industry Context - The Retail - Discount Stores industry is part of the Retail-Wholesale sector, which holds a Zacks Industry Rank of 58, placing it in the top 24% of over 250 industries [8] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [9]

Core Insights - Costco shares have increased by 35% over the past year, outperforming the industry growth of 19.4% [1] - Paid household memberships rose by 7.6%, while Executive Memberships increased by 9.2% [1][6] - Costco's forward 12-month price-to-earnings ratio is 49.53, significantly higher than the industry's ratio of 29.83 [1][10] Sales Performance - For the five weeks ending January 5, comparable sales in the U.S. grew by 9.3%, while Canada and Other International markets saw increases of 4.3% and 1%, respectively, leading to a total comparable sales rise of 7.4% [3] - E-commerce comparable sales surged by 34.4%, or 35.7% when adjusted for gasoline prices and foreign exchange fluctuations [3] - Costco's net sales for December reached $27.52 billion, a 9.9% increase from $25.03 billion in the same period last year [4] Membership Model - The membership-driven business model is a key growth driver, with renewal rates exceeding 90% in major markets [5] - Membership fee income grew by 7.8% year-over-year during the first quarter of fiscal 2025 [6] - Executive Memberships contribute 73.1% of worldwide sales, highlighting their importance to Costco's financial performance [6] Strategic Initiatives - Costco opened seven warehouses during the first quarter, with plans to open 29 warehouses for fiscal 2025 [8] - The company adapts to market trends by updating its product mix and leveraging e-commerce to capture online shopping growth [7][8] Valuation Analysis - Costco's stock is trading at a premium compared to industry peers, reflecting investor confidence in its growth potential [10][11] - Analysts have revised earnings per share estimates upward, indicating expected growth rates of 11.8% and 9.2% for the current and next fiscal years, respectively [15] Investment Outlook - Costco's robust business model and consistent sales growth position it as a strong player in the retail sector, despite its premium valuation [17] - The company holds a Zacks Rank 2 (Buy), suggesting promising upside potential for investors [17]

Investors seek growth stocks to capitalize on above-average growth in financials that help these securities grab the market's attention and produce exceptional returns. However, it isn't easy to find a great growth stock.By their very nature, these stocks carry above-average risk and volatility. Moreover, if a company's growth story is over or nearing its end, betting on it could lead to significant loss.However, the Zacks Growth Style Score (part of the Zacks Style Scores system), which looks beyond the tr ...

Investors often turn to recommendations made by Wall Street analysts before making a Buy, Sell, or Hold decision about a stock. While media reports about rating changes by these brokerage-firm employed (or sell-side) analysts often affect a stock's price, do they really matter?Let's take a look at what these Wall Street heavyweights have to say about Costco (COST) before we discuss the reliability of brokerage recommendations and how to use them to your advantage.Costco currently has an average brokerage re ...

Costco's Business Strategy - Costco attracts members with low-cost items like hot dogs and bananas, while encouraging bulk purchases of high-dollar products [1] - The company's strategy focuses on creating a value proposition that combines affordable everyday items with larger, more expensive purchases [1] Investment Perspective - The analyst has a long position in Costco shares through stock ownership, options, or other derivatives [2] - The article reflects the analyst's personal opinions and is not influenced by compensation or business relationships with the mentioned company [2] Note: The content does not provide specific financial data, percentage changes, or detailed industry analysis, so those aspects are not included in the summary

Costco's Business Model and Market Presence - Costco operates nearly 900 member-only warehouses across multiple countries, including the US, Canada, Mexico, Australia, and several others [1] - The company attracts millions of customers with its low prices on a wide range of products [1] Valuation and Historical Context - Costco's stock currently trades at over 54 times earnings, a level not seen since April 1999 when its trailing 12-month P/E multiple hit 56.4 [2][3] - In 1999, after reaching this valuation, Costco's share price fell more than 20% within months and later plunged over 40% in 2000 [3] - The current forward earnings multiple of 50.8 and a PEG ratio of 5.5 indicate that the stock remains highly expensive [10] Market Comparisons and Potential Risks - The stock market in 2025 is again expensive, driven by enthusiasm for AI, similar to the dot-com bubble in 1999 [6] - Costco's high valuation is not limited to AI stocks, as it was also an exception in 1999 when many stocks had unjustified valuations [5][11] Growth Prospects and Earnings - Costco reported year-over-year earnings growth of 13% in its latest quarter, which may not be sufficient to justify its high P/E multiple [13] - Unless earnings accelerate significantly, the share price is likely to decline to a level more in line with realistic growth expectations [13][14] Investment Case for Costco - Despite its high valuation, some analysts believe Costco's shares can continue to rise due to its resilient business model and long-term growth opportunities [8][12] - Costco has earned its premium valuation through consistent market-share wins and a stable membership fee-based business model [12] - A potential pullback in the stock price could present an excellent buying opportunity for long-term investors [14]

Zacks Rank and Stock Performance - The Zacks Rank system has a strong track record, with 1 ranked stocks delivering an average annual return of +25% since 1988 [1] - Costco currently holds a Zacks Rank of 3 (Hold) [1] - Costco's stock closed at $936 94, up +1 03% from the previous session, outperforming the S&P 500's daily loss of 1 54% [2] - Over the past month, Costco shares lost 6 17%, underperforming the Retail-Wholesale sector's loss of 4 27% and the S&P 500's loss of 2 2% [2] Earnings and Revenue Estimates - Costco is expected to post an EPS of $4 05 in its upcoming earnings release, representing a 9 16% growth compared to the same quarter last year [3] - Revenue is anticipated to be $62 74 billion, a 7 36% increase from the same quarter last year [3] - For the full year, earnings are projected at $18 01 per share, an 11 79% increase, and revenue at $272 46 billion, a 7 08% increase from the prior year [4] Analyst Estimates and Valuation - Recent upward revisions in analyst estimates reflect positivity towards Costco's business operations and profit generation [5] - Estimate changes are directly correlated with near-term stock prices, and the Zacks Rank system incorporates these changes [6] - Costco has a Forward P/E ratio of 51 5, significantly higher than the industry average of 21 37, indicating a premium valuation [7] - Costco's PEG ratio is 5 54, compared to the industry average of 2 29, suggesting a higher valuation relative to expected earnings growth [8] Industry Overview - The Retail - Discount Stores industry is part of the Retail-Wholesale sector and holds a Zacks Industry Rank of 177, placing it in the bottom 30% of all industries [9] - Industries in the top 50% of the Zacks Industry Rank outperform the bottom half by a factor of 2 to 1 [9]

Company Performance - Costco's stock surged 37 6% over the past year, outperforming the industry (21 8%) and the S&P 500 (25%) [4] - Comparable sales growth was 7 4% in December, following increases of 3 1% and 5 1% in November and October, respectively [2] - Membership fee income grew 7 8% year over year in Q1 fiscal 2025, with paid household memberships up 7 6% and Executive Memberships increasing 9 2% [18] Business Model & Operations - Costco's private-label brand, Kirkland Signature, drives consumer loyalty and repeat business [2] - The company operates on thin margins but high volume due to cost-efficient operations [3] - Membership-based model ensures steady revenue, with renewal rates exceeding 90% in the US and Canada [18] Growth & Expansion - Costco opened six net new warehouses in Q1 fiscal 2025, four of which were outside the US [3] - E-commerce comparable sales grew 13% in Q1, driven by Costco Logistics, which made nearly 1 million deliveries [16] - The US app was downloaded 2 9 million times in Q1, bringing total downloads to approximately 42 million [6][16] Financials & Valuation - Costco's forward 12-month P/E ratio is 49 87, higher than the industry (30 33) and the S&P 500 (22 13) [8] - Zacks Consensus Estimate for EPS increased by 14 and 26 cents for the current and next fiscal years, respectively, indicating expected YoY growth rates of 11 7% and 9 4% [11] Challenges & Risks - SG&A expenses rose 9 1% YoY in the last reported quarter due to higher employee wages and expansion costs [7] - Intense competition from Walmart, BJ's Wholesale Club, and Amazon, which are investing in e-commerce and customer experience [13] - Inflationary pressures are causing consumers to be more judicious with disposable income, affecting merchandise categories [19] Market Sentiment & Investor Considerations - Costco's stock is trading below its 50-day moving average, indicating short-term weakness [20] - Positive estimate revisions highlight strong fundamentals, but high valuation and recent volatility may prompt some investors to book profits [15]

Stock Performance - Costco Wholesale shares surged 38 8% in 2024, driven by strong market performance and expansion of its price-to-earnings (P/E) multiple from 45 to 54 [1][2] - The company's market capitalization exceeded $400 billion, with annual sales reaching $260 billion [1] E-commerce Growth - E-commerce revenue grew 17 1% in the quarter, more than triple the overall revenue growth, highlighting the importance of increasing e-commerce presence to compete with Amazon and Walmart [2] Retail Model and Revenue - Costco's membership-based retail model and bulk pricing strategy have solidified its competitive position, leading to a 5 7% year-over-year revenue growth in Q4 2024 to $94 billion [4] - The US business showed 6% revenue growth, indicating significant potential for global expansion [4] Valuation and Growth Prospects - Costco has historically traded at a premium P/E due to consistent earnings growth and a robust business model, but the current P/E of 54 is close to its 10-year high and well above the 10-year average of 36 [5][6] - With $260 billion in annual sales, rapid growth may be challenging, and a reversion of the P/E to its long-term average could pose risks [6]