Core Viewpoint - Costco's stock has significantly outperformed the market in 2026, with a year-to-date increase of approximately 15%, reflecting investor confidence in its consistent growth capabilities in various market conditions [3][4]. Sales Performance - Costco reported a 9.3% year-over-year increase in sales for January, driven by a 7.1% rise in same-store sales, which excludes the effects of gasoline prices and foreign exchange fluctuations [6]. - Adjusted same-store sales growth accelerated to 6.4% year-over-year, up from 6.2% in December, indicating robust sales momentum despite potential weather-related impacts [7]. - Digitally enabled sales, which account for 10% of overall revenue, surged by 33.1% year-over-year in January, a significant increase from 18.3% growth in December, showcasing the effectiveness of Costco's digital engagement strategies [8][9]. Historical Sales Growth - Sales growth has remained strong over the past few years, with fiscal year sales increasing by 7%, 5%, and 8% in 2023, 2024, and 2025, respectively, despite challenging comparisons to the high growth rates during the COVID-19 pandemic [10]. Valuation Concerns - Despite Costco's strong business performance, concerns about its current valuation arise, with a price-to-earnings ratio of 53, which implies expectations of 15% annual earnings-per-share growth, while actual growth was only 10% in fiscal 2025 [11][12][13]. - The high valuation presents a risk of potential re-rating, suggesting that even a well-performing business can face valuation risks if the stock price is deemed excessive [12].

Group 1: Apple Inc. - Apple is a leader in consumer technology, known for its popular hardware devices and strong brand recognition, which allows it to maintain pricing power [2][4] - The company develops its own software and services, creating a robust ecosystem that enhances customer loyalty and retention [3] - In Q1 2026, Apple reported a net income of $42.1 billion on revenue of $143.8 billion, resulting in a profit margin of 29% [4] Group 2: Costco Wholesale Corporation - Costco performs well in various economic conditions, with same-store sales growth of 5.9% in fiscal 2025 and 6.4% in Q1 2026 [5] - The company has a high membership renewal rate of nearly 90%, indicating strong customer loyalty [6] - Costco maintains low product prices by purchasing in bulk, allowing it to negotiate favorable terms with suppliers and pass savings to customers [7]

Core Viewpoint - Costco Wholesale Corporation (NASDAQ:COST) is recognized as one of the best dividend stocks with a strong competitive advantage, supported by its membership growth and consistent performance in various economic conditions [1][2]. Group 1: Financial Performance - Mizuho raised its price target for Costco from $1,000 to $1,065, maintaining an Outperform rating, anticipating continued support for the stock as membership growth rebounds and consumer spending normalizes [2]. - Over the past five years, Costco's shares have increased by more than 177%, significantly outperforming the S&P 500's approximately 80% gain, demonstrating a consistent and methodical strategy [3]. Group 2: Business Model and Customer Loyalty - Costco's business model is characterized by a strong focus on membership fees, which provide a reliable and recurring source of profit, rather than relying solely on merchandise margins [4]. - The retailer enjoys a high level of customer loyalty, with shoppers drawn to its bulk bargains and low prices, exemplified by popular items like its inexpensive hot-dog combo [4]. Group 3: Dividend History - Costco has a strong track record of dividend payments, having raised its payout for 20 consecutive years, with a current yield of around 0.5%, utilizing only about 25% of its earnings for dividends, allowing for future growth [5].

Group 1: Coca-Cola - Coca-Cola is one of the largest beverage makers globally and is currently trading near its 52-week high, demonstrating resilience despite challenges like tariffs [2][3] - The company has a strong history of innovation, regularly launching new products to keep up with changing consumer preferences, supported by a vast portfolio of beverages [4] - Coca-Cola has a remarkable dividend record, with 63 consecutive years of payout increases, qualifying it as a Dividend King, indicating its ability to consistently reward shareholders [5] Group 2: Costco - Costco's business model, which focuses on bulk sales with thin margins, faced challenges in 2025 due to tariffs, impacting its performance [6] - Despite past difficulties, Costco's recent quarterly update exceeded market expectations, suggesting potential for maintaining momentum [6] - Long-term prospects for Costco remain positive, indicating confidence in its future performance [6]

Core Viewpoint - Costco experienced a challenging year in 2025, with its stock declining by 6%, contrasting with a 16% gain in the S&P 500, indicating a rare and significant underperformance for the warehouse retailer [1] Company Performance - The decline in Costco's stock is notable as it marks a significant deviation from the overall market performance, highlighting potential concerns regarding the company's competitive positioning and operational challenges in the current economic environment [1] Market Context - The S&P 500's 16% gain during the same period underscores a broader market strength, suggesting that Costco's struggles may be more pronounced in comparison to its peers and the overall retail sector [1]

Core Insights - Costco Wholesale Corp. is selling authentic Hermes Birkin bags and select Chanel products at significant discounts in Chinese warehouses, with prices around $14,000, which is considerably lower than the typical market price [1] - This strategy, initiated during Costco's debut in Shanghai in 2019, has generated substantial demand among affluent Chinese consumers [2] - In the first quarter of fiscal 2026, Costco reported revenue of $67.31 billion, surpassing estimates of $67.14 billion, and adjusted earnings of $4.50 per share, exceeding the consensus of $4.27 [2] Stock Performance and Analyst Ratings - Mizuho upgraded Costco to Outperform from Neutral, raising its price target to $1,000 from $950, indicating a potential upside of approximately 17% [3] - Costco has a quality score of 95.92% and a value rating of 35.22% according to Benzinga Edge Stock Rankings, allowing for performance comparison with peers [3] - Over the past year, Costco's stock has declined by 4.26%, closing at $978.35 with a slight increase of 0.04% on the last trading day [4]

Core Viewpoint - Investors are encouraged to regularly reassess their portfolios, considering whether to buy, sell, or hold stocks like Costco Wholesale, which has shown strong performance but may require evaluation in light of changing market conditions [1][2]. Company Performance - Costco has produced a total return of 188% over the past five years, indicating strong historical performance [2]. - The company continues to show solid same-store sales growth, with a 3.1% increase in traffic reported for the first quarter of fiscal 2026 [5]. - Analysts project Costco's revenue to grow at a compound annual rate of 7.6% from fiscal 2025 to fiscal 2028, supported by plans for at least 30 new warehouse openings annually [6]. Market Position - Costco shares are currently trading at a price-to-earnings ratio of 52.9, which is 106% higher than the S&P 500 index and represents significant premiums over competitors like Walmart and BJ's Wholesale [9]. - Despite trading 8% below its peak, Costco's stock has appreciated by 15% in 2026, reflecting the market's premium valuation of the company due to its predictable financial performance [8]. Investment Recommendation - The current assessment suggests that Costco stock is not a buy at this moment, but existing shareholders should hold their positions due to the company's strong fundamentals [10].

Costco Wholesale (NasdaqGS:COST) 2025 Update Summary Industry Overview - The call discusses the retail performance of Costco Wholesale for the month of January 2026, comparing it to the same period in 2025 [1] Key Financial Metrics - **Net Sales**: $21.33 billion, a 9.3% increase from $19.51 billion in January 2025 [2] - **Comparable Sales**: - U.S.: 5.8% - Canada: 11.4% - Other International: 9.5% - Total Company: 7.1% - Digitally Enabled: 34.4% [2] - **Comparable Sales Excluding Gas and FX**: - U.S.: 6.8% - Canada: 8.2% - Other International: 2.7% - Total Company: 6.4% - Digitally Enabled: 33.1% [3] - **Traffic Growth**: Up 2.4% worldwide and 2.2% in the U.S. [3] Impact of External Factors - Lunar and Chinese New Year shifts negatively impacted sales by approximately 4% for other international and 0.5% for total company sales [3] - Foreign currency fluctuations positively impacted sales: - Canada: +4.8% - Other International: +7.6% - Total Company: +1.7% [4] - Gas price deflation negatively impacted total reported comparable sales by approximately 100 basis points, with an average worldwide selling price per gallon down 9.6% year-over-year [4] Regional Performance - Strongest comparable sales in the U.S. were observed in the Midwest, Southeast, and Texas [4] - Best performing international markets included Australia, the United Kingdom, and Mexico [4] Merchandising Highlights - **Food and Sundries**: Positive mid-single digits - **Fresh Foods**: Up mid-single digits, with bakery and meat performing well - **Non-Foods**: Positive low double digits, with jewelry, tires, and majors as top performers - **Ancillary Business Sales**: Up low to mid-single digits, with pharmacy, food court, and hearing aids as top performers - **Gas Sales**: Down mid to high single digits due to price changes [5] Future Outlook - The next reporting period will cover February 2 to March 1, 2026, compared to February 3 to March 2, 2025 [5]

Group 1: SpaceX and XAI Merger - SpaceX is merging with Elon Musk's AI startup XAI, creating a combined entity valued at $1.25 trillion [7][8]. - The merger aims to develop a space-based communications platform, requiring the launch of a million satellites into orbit [7]. - The integration of SpaceX and XAI is expected to enhance operational efficiency, particularly in building data centers in space [10][13]. Group 2: IPO Outlook - There is a high probability (72%) that SpaceX will go public before OpenAI, with expectations for a potential IPO by June [18][19]. - The IPO market is anticipated to be robust this year, driven by favorable economic conditions and a pro-business administration [87][90]. - Companies are increasingly willing to take risks on IPOs, reflecting a shift in market sentiment towards a more stable environment [91][96]. Group 3: Palantir's Performance - Palantir's stock has seen significant growth, with a recent increase in revenue growth rates from 50% to 70% [33][34]. - The company is capitalizing on opportunities in the U.S. commercial sector, which grew by 137% [35]. - Palantir's unique capabilities in data organization and deployment are contributing to its success in the AI era [37][42]. Group 4: PayPal's Leadership Change - PayPal's shares fell sharply after announcing a leadership change, with Enrique Lores taking over as CEO [57][58]. - The company reported a decline in branded checkout growth, which dropped to 1% from 6% year-over-year [58]. - PayPal's total payment volume for the quarter was $475 billion, indicating its scale in the fintech sector [62]. Group 5: Market Trends and Analyst Insights - Analysts are observing a mixed performance in large-cap technology stocks, with Nvidia and Microsoft facing pressure [4][5]. - Walmart has joined the trillion-dollar market cap club, reflecting strong performance under new leadership [5][6]. - The software sector is expected to continue growing, with good companies likely to outperform in the AI-driven market [40][45].

Core Insights - Costco's membership-driven business model is a significant competitive advantage, leading to consistent revenue growth and strong cash flow [1] - Membership fees increased by 14% year over year to $1,329 million in Q1 FY26, highlighting the reliability of membership income as a growth lever [9] Membership Income Growth - The fee increase in September contributed to nearly half of the membership income gain, with a 7.3% year-over-year growth excluding fee hikes and foreign exchange effects [2] - The membership base grew to 81.4 million paid memberships, a 5.2% increase, and 145.9 million cardholders, up 5.1% year over year [3] - Executive memberships rose by 9.1% to 39.7 million, now accounting for 74.3% of total sales [3][9] Renewal Rates and Stability - Renewal rates remained high at 92.2% in the U.S. and Canada and 89.7% globally, with a slight dip due to faster growth in younger members [4] - Targeted outreach to expiring members helped mitigate renewal rate pressures, reinforcing the stability of membership income [5] Competitive Landscape - Walmart reported a 17% growth in global membership fee income, indicating strong momentum in its membership programs [6] - BJ's Wholesale Club saw a 9.8% increase in membership fee income, benefiting from high renewal rates and increased higher-tier membership adoption [7] Stock Performance and Valuation - Costco's stock increased by 10.6% over the past month, outperforming the industry growth of 5.4% [8] - The forward 12-month price-to-earnings ratio for Costco is 46.25, higher than the industry average of 33.53 but below its 12-month median of 48.32 [10] Financial Estimates - The Zacks Consensus Estimate for Costco's current financial-year sales implies a year-over-year growth of 7.8%, while earnings per share are expected to grow by 12% [11] - Current estimates for sales and earnings per share for the upcoming quarters indicate continued growth, with year-over-year growth estimates ranging from 7.12% to 12.19% [14][15]