Costco Wholesale Corporation (NASDAQ:COST) is one of the Top Blue Chip Stocks to Buy At 52-Week Lows. On September 25, Costco Wholesale Corporation (NASDAQ:COST) released its fiscal fourth quarter results for 2025. The company delivered $86.16 billion in revenue, up 8.10% year-over-year and ahead of expectations by $99.41 million. The EPS of $5.87 also topped estimates by $0.07. Wall Street has a mixed opinion on the stock despite the outperformance. On September 29, Steven Zaccone from Citi reiterated ...

Core Insights - Costco Wholesale Corporation (NASDAQ:COST) is considered a top choice for retirement portfolios, with a price target set at $1,205 by UBS, which maintains a Buy rating on the stock [1] - Market anxieties prior to Costco's fourth-quarter earnings are expected to shift towards new issues following the earnings release [1] Sales Momentum - UBS expresses confidence in Costco's ability to sustain sales momentum due to factors such as extended hours of operation and new holiday season products [2] Business Strategy - The growth of Kirkland Signature brands and prospects in digital commerce are highlighted as key components of Costco's business strategy [3] - Costco's ability to maintain core-on-core margin progress and effectively manage tariffs is noted as a factor that should help keep the stock's valuation stable [3] - Costco operates as a membership-based warehouse club, providing bulk discounts on a variety of products including food, electronics, and household items [3]

Core Viewpoint - The government shutdown is expected to have a significant impact on consumer spending and certain retail stocks, particularly as the holiday shopping season approaches [1][4]. Market Performance - Initial market reactions included a dip, but there is a recovery as the market adjusts to the anticipated short duration of the shutdown, likely between one week to ten days [2][3]. Impact on Employment and Consumer Spending - Approximately two million federal employees may face furloughs, which could affect consumer spending and the housing market, especially if mass layoffs occur [3][4]. - The duration of the shutdown and potential mass layoffs will be critical factors influencing consumer behavior and spending patterns [4][7]. Holiday Shopping Season - The holiday shopping season is set to begin in early to mid-October, and any mass layoffs could quickly impact holiday spending [5][6]. - Retail forecasts from organizations like the National Retail Federation and Mastercard will be closely monitored for adjustments due to the shutdown [7]. Consumer Behavior and Retail Preferences - In a tightening economic environment, consumers are likely to gravitate towards cost-conscious retailers such as Costco, Walmart, and TJX, which offer better value [8][9]. - Retailers like Target and traditional department stores may be more vulnerable due to their positioning in the market [10][11]. Retailer Performance Outlook - Costco is highlighted as a strong performer due to its one-stop shopping model and focus on fresh foods, which appeals to consumers during the holiday season [12][15]. - Holiday spending is projected to increase by 3.4%, with Costco expected to outperform this figure based on its ability to capture consumer wallet share [17][18]. Demographic Spending Trends - There are concerns that Gen Z may reduce their holiday spending by 25% if the shutdown persists, reflecting broader consumer sentiment [19][20]. - The overall impact of the shutdown could lead to a general tightening of spending across various demographic groups, not just Gen Z [20][21].

Core Insights - Costco Wholesale reported net sales of $269.9 billion for fiscal 2025, showcasing its dominance in the retail sector [1] - The company has experienced a 160% increase in share price over the past five years, reflecting strong investor confidence [1] Durable Demand - Despite macroeconomic challenges, Costco demonstrated resilience with a same-store sales growth of 5.7% in Q4, driven by increased foot traffic and higher transaction sizes [4] - The global membership renewal rate reached 89.8% in Q4, with a year-over-year membership increase of 6.3%, indicating strong customer loyalty [5] Ongoing Growth - Costco opened 24 net new warehouse stores during fiscal 2025, bringing the total to 629 in the U.S. and 285 internationally, with plans for 30 new locations in fiscal 2026 [6] - E-commerce sales grew by 13.6% year over year in Q4, totaling nearly $20 billion, which represents 7% of the company's total sales [8]

Core Viewpoint - Costco Wholesale has historically outperformed the market but is currently experiencing a rare period of underperformance, remaining flat year-to-date while the market has risen by 14% [2] Group 1: Business Model and Performance - Costco's retail model is distinct and superior, charging annual membership fees that allow customers to access low prices, leading to high savings and increased sales volume [4][5] - In the fiscal fourth quarter of 2025, Costco reported an 8% year-over-year sales increase, with comparable sales up 5.7% and e-commerce sales rising by 13.6% [6] - Earnings per share increased from $5.29 to $5.87, and membership fees rose by 14%, with total members reaching 81 million, a 6.3% increase from the previous year [6] Group 2: Membership Insights - Executive members, who pay double the standard membership fee of $130, represent 47.7% of total paid members but account for 74.2% of sales [7] - Renewal rates for memberships were strong at 92.3% in the U.S. and Canada, and 89.8% globally [7] Group 3: Market Sentiment and Challenges - Despite strong performance metrics, the market has shown some negative sentiment due to slowing comparable sales growth and lower-than-usual global renewals [10] - Management attributes the decline in renewal rates to an increase in online signups, which tend to renew at slightly lower rates, but sees this as a net advantage for attracting younger members [10]

Core Insights - Costco Wholesale reported strong net sales growth for fiscal 2025, with revenue reaching $275 billion, an 8% increase despite economic uncertainties and tariff concerns [1][4] - The company's stock performance has been modest, with only a 2% increase over the past year, leading to a cautious outlook for new investors [5] Financial Performance - Revenue growth was supported by a membership fee increase from $60 to $65, contributing to a $495 million rise in membership fee revenue [4] - Operating income rose by 12%, while net income increased by 10% to $8.1 billion, despite a 15% rise in income tax expenses [5] - Costco added 24 new locations, marking a nearly 3% increase in total warehouses to 914 [4] Valuation Concerns - The current price-to-earnings (P/E) ratio stands at 52, significantly higher than the S&P 500 average of 31 and its major competitors [6] - The likelihood of Costco's valuation decreasing to more reasonable levels, such as Walmart's P/E ratio of 39, appears low [9] Expansion Outlook - Costco's expansion strategy remains steady, with successful penetration into new U.S. markets and international growth, unlike competitors such as Walmart and Home Depot [10] - There is uncertainty regarding whether Costco can or should accelerate its expansion efforts [8]

[Music] It is time for the light of course and then the lightning round is over. Are you ready ski daddy time for the light round so John in North Carolina John. >> Yes. Uh yes sir.Got a question about Arista Network. Ticker symbol A N E T. >> J Shri Yal is unbelievable.I was talking to her neighbor today. Literally came to my book signing and we were both marveling. I got to get her back on the show.That company is doing so well. Great call. Let's go to Todd in Connecticut.Todd, >> hey Jim, how you doing. ...

Core Insights - Costco slightly exceeded earnings expectations, but the market reaction was negative, with shares dropping 2% [1] Group 1: Earnings Performance - Costco reported an 8% sales increase to $86.2 billion, surpassing analysts' expectations of $86 billion [5] - The company achieved increases in both revenue and net income, contrasting with declines reported by other retailers like Target and Macy's [3][4] Group 2: E-commerce Growth - E-commerce revenue rose by 13.6% year-over-year, contributing to better-than-expected sales [6] - For the full fiscal year, e-commerce sales increased by 15% to $19.6 billion, representing 7% of net sales, with a 27% increase in traffic to the e-commerce site [7] - Management noted that nearly half of new memberships are from individuals under 40, although online members are less likely to renew [8] Group 3: Holiday Strategy - Costco has begun its holiday season preparations, but CEO Ron Vachris indicated a shift in product offerings, focusing on high-ticket items rather than traditional seasonal goods [9][10] - The company has reduced its stock of discretionary items, signaling an expectation of continued low discretionary spending [11] Group 4: Market Position - Despite a solid quarter, Costco's stock performance has lagged behind the S&P 500 by over 13 percentage points [12] - The company is well-positioned to retain value even if consumer discretionary spending declines further [12]

Core Viewpoint - Costco reported strong earnings and revenue results, demonstrating its pricing power and resilience in a challenging economic environment, making it a favorable investment option [1][11][12] Financial Performance - For the 16-week quarter, Costco achieved net sales of $84.43 billion, an 8% increase year-over-year, and total revenue of $86.16 billion, surpassing estimates [2] - The net income for the quarter was $2.61 billion, translating to $5.87 in earnings per diluted share, exceeding expectations of $5.80 per share [2] - For the full fiscal year 2025, Costco's net sales reached approximately $269.9 billion, up from $249.6 billion in the previous year, with diluted EPS rising to $18.21 from $16.56 [3] Sales Trends - Comparable sales for Q4 showed strong performance, with adjusted U.S. sales increasing by 6%, Canada by 8.3%, and international sales by 7.2%, leading to an overall increase of 6.4% for the quarter [4] - E-commerce sales saw a significant rise, with adjusted comp sales increasing by 16.1% over the 52-week period [5] Membership and Cash Flow - Membership fees increased by 14% to $1.72 billion in Q4, highlighting the strength of Costco's membership model [5] - The company maintained robust free cash flow, with operating cash inflows of $13.34 billion and total cash/equivalents rising to $14.16 billion from $9.9 billion the previous year [6] Market Position and Consumer Behavior - Despite economic headwinds such as inflation and consumer spending cuts, Costco's commitment to low prices on essential goods has attracted more customers [7] - The company is strategically reinvesting a portion of its fee increases to enhance pricing competitiveness, benefiting both members and shareholders [7] Long-term Outlook - Although comparable sales growth has slowed in recent quarters, Costco's ability to grow in e-commerce and maintain a strong capital position suggests it remains a solid long-term investment [11] - The modest headline beat in earnings reflects Costco's defensive strength and potential for upside, reinforcing its value as a portfolio asset [12]

Core Insights - Costco's stock experienced a significant decline of over $27 due to membership growth not meeting market expectations, despite better-than-expected sales and earnings [1] - The company successfully increased membership fees without losing members, and there is a notable influx of younger members, alleviating concerns about an aging customer base [1] - Costco has managed to mitigate price increases on tariff-affected goods, which is a positive indicator for its operational resilience [1] Company Overview - Costco operates membership-based warehouses that offer a wide range of branded and private-label products, including groceries, appliances, apparel, and home essentials [2]