Core Insights - Costco reported quarterly earnings of $4.02 per share, missing the Zacks Consensus Estimate of $4.09 per share, but showing an increase from $3.71 per share a year ago, resulting in an earnings surprise of -1.71% [1] - The company posted revenues of $63.72 billion for the quarter ended February 2025, surpassing the Zacks Consensus Estimate by 0.79% and increasing from $58.44 billion year-over-year [2] - Costco shares have increased by approximately 14.4% since the beginning of the year, contrasting with a -0.7% decline in the S&P 500 [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $4.25, with expected revenues of $62.76 billion, and for the current fiscal year, the EPS estimate is $18.03 on revenues of $273.31 billion [7] - The estimate revisions trend for Costco is currently favorable, leading to a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Retail - Discount Stores industry, to which Costco belongs, is currently ranked in the top 34% of over 250 Zacks industries, suggesting a positive outlook for stocks within this sector [8] - Another company in the same industry, Dollar Tree, is expected to report quarterly earnings of $2.18 per share, reflecting a year-over-year decline of -14.5% [9]

Core Insights - Costco Wholesale reported strong earnings with a net sales increase of 9.1% year-over-year, reaching $62.53 billion, driven by robust sales growth and e-commerce performance [2][5] - Membership fees contributed an additional $1.193 billion, reflecting a 7.3% increase, while net income grew modestly to $1.788 billion, influenced by prior year's one-time tax benefits [2][6] - The company maintains a high membership renewal rate of 92.9% in the U.S. and 90.5% globally, emphasizing customer loyalty as a key component of its business model [3] Financial Performance - For Q2 2025, Costco's diluted EPS was $4.02, a 2.6% increase from $3.92 in Q2 2024 [3] - Revenue for the quarter was $63.72 billion, up from $58.44 billion in the same quarter last year, marking a 9% year-over-year increase [3] - Operating income was reported at $2.316 billion, with comparable sales growth of 6.8% across the company [6] Business Model and Strategy - Costco operates under a membership model that offers bulk products at discounted rates, heavily relying on membership fees to drive customer loyalty [3][4] - The company employs strategies such as rapid inventory turnover and cross-docking to maintain operational efficiency and keep costs low [4] - The Kirkland Signature private label is utilized to enhance margins through high-quality offerings, supporting Costco's cost leadership in the retail sector [4] Market Performance - The U.S. market experienced an 8.6% growth in comparable sales, indicating strong domestic demand [6] - E-commerce sales surged by 20.9%, contributing significantly to overall sales growth [5] - Canadian and international segments showed varied performance, with Canada achieving a 10.5% growth and other international operations at 10.3% adjusted growth [6] Future Outlook - Management has a positive outlook for fiscal 2025, planning to open 29 new warehouses to expand its international presence and product offerings [7]

Core Insights - Costco reported an earnings miss but exceeded revenue expectations for the second quarter [1][3] Revenue Performance - Second-quarter revenue increased by 9% to $63.72 billion, up from $58.44 billion in the same quarter of fiscal 2024 [1] - Net sales for the quarter rose by 9.1% to $62.53 billion, compared to $57.33 billion in the year-ago period [1] Net Income and Earnings Per Share - Net income for the second quarter was $1.79 billion, or $4.02 per share, compared to $1.74 billion, or $3.92 per share, during the second quarter of fiscal 2024 [2] - Earnings per share were $4.02, which was below the expected $4.11 [3] Comparable Sales - Quarterly comparable sales increased by 6.8% year over year, with an 8.3% increase in the U.S. [2] - E-commerce comparable sales rose by 20.9% year over year [2]

Core Insights - Costco Wholesale Corporation reported a net sales increase of 9.1% for the second quarter of fiscal 2025, reaching $62.53 billion compared to $57.33 billion in the same period last year [1] - For the first 24 weeks of fiscal 2025, net sales rose by 8.3% to $123.52 billion from $114.05 billion [1] Sales Performance - Comparable sales for the second quarter showed an increase of 6.8% for the total company, with U.S. sales up 8.3% and Canadian sales up 4.6% [2] - E-commerce sales experienced significant growth, with a 20.9% increase in the second quarter [2] - For the four-week reporting month of February, net sales were $19.81 billion, an increase of 8.8% from $18.21 billion last year [3] Profitability - Net income for the second quarter was $1,788 million, or $4.02 per diluted share, compared to $1,743 million, or $3.92 per diluted share, in the previous year [2] - The first 24 weeks net income was $3.59 billion, or $8.06 per diluted share, compared to $3.33 billion, or $7.49 per diluted share, last year [2] Operational Metrics - Costco operates 897 warehouses globally, with 617 located in the U.S. and Puerto Rico [3] - The company reported total revenue of $63.72 billion for the second quarter, up from $58.44 billion last year [8] Cash Flow and Financial Position - Net cash provided by operating activities for the first 24 weeks was $6.008 billion, an increase from $5.382 billion in the previous year [11] - Cash and cash equivalents at the end of the reporting period were $12.356 billion, up from $9.906 billion at the beginning of the year [10]

Market Overview - The S&P 500 has experienced a dip due to tariff concerns and inflation worries, with the Cboe Volatility Index (VIX) rising above 20 [1] - Despite a strong fourth-quarter earnings season, investor confidence has been shaken, as indicated by the American Association of Individual Investors (AAII) survey showing a high number of net bears [4][5] Consumer Sentiment - The University of Michigan's Consumer Sentiment index fell by 10%, reflecting household concerns over potential inflation from tariffs [3] - The Conference Board reported a significant drop in household confidence, the largest since 2021, indicating a disconnect between CEO confidence and consumer sentiment [3] Corporate Earnings and Economic Indicators - The fourth-quarter earnings season showed the best bottom-line growth for the S&P 500 since 2021, driven by companies like NVIDIA [2] - Costco reported a strong 9.8% increase in January sales, suggesting resilience in consumer spending despite broader economic concerns [7][8] - Taiwan Semiconductor's revenue report is anticipated to provide insights into the semiconductor industry's health, following NVIDIA's mixed earnings reaction [9] Upcoming Reports and Expectations - Upcoming earnings reports from major firms, including Costco and Taiwan Semiconductor, are expected to provide critical data on consumer behavior and industry performance [12] - Asset managers like Invesco and T. Rowe Price are set to release AUM reports that could reflect market trends and investor sentiment [10][11]

Core Viewpoint - The escalation of trade tensions due to new tariffs imposed by the U.S. on Canada, Mexico, and China is expected to significantly impact various sectors, leading to increased costs for consumers and potential disruptions in the global economy [1][4]. Automobiles - The automobile sector will be heavily affected, with Canada and Mexico accounting for approximately 47% of U.S. auto imports and 54% of car part imports [6]. - U.S. carmakers could see a reduction of 10-25% in their annual EBITDA due to the new tariffs, with potential increases of up to $12,000 in the price of new cars [7]. - ETFs like First Trust S-Network Future Vehicles & Technology ETF (CARZ) are likely to face pressure [7]. Agriculture - The agricultural export sector, valued at $191 billion, is threatened by the tariffs, particularly affecting imports of grains, meats, and dairy products from Canada and Mexico [8]. - The tariffs are expected to increase grocery prices, especially since Mexico is a key supplier of various produce to the U.S. [9]. - The Invesco DB Agriculture Fund (DBA) is anticipated to experience rough trading conditions [9]. Homebuilding - Tariffs will raise the costs of building materials, leading to a projected increase of 4-6% in homebuilding costs over the next year, which will negatively impact profitability [10]. - Companies like D.R. Horton (DHI), Toll Brothers (TOL), and Lennar (LEN), along with ETFs such as iShares U.S. Home Construction ETF (ITB) and SPDR S&P Homebuilders ETF (XHB), will be affected [10][11]. Aerospace - The aerospace industry will face increased production costs due to retaliatory tariffs from major buyers like China, Mexico, and Canada [12]. - Companies such as Boeing (BA) and Airbus, along with suppliers like Spirit AeroSystems and Hexcel, will see higher raw material costs [12]. - The iShares U.S. Aerospace & Defense ETF (ITA) is likely to be negatively impacted [12]. Retail - Major retailers, including Walmart (WMT), Target (TGT), Best Buy (BBY), and Costco (COST), are expected to face higher prices due to tariffs on consumer goods sourced from China and Mexico [13]. - Over 80% of toys sold in the U.S. are made in China, making retailers vulnerable to increased costs [14]. - Walmart's grocery business could also see rising costs, as Mexico supplies a significant portion of U.S. fruit and vegetable imports [14]. Energy - The energy sector will experience increased costs due to a 10% tariff on Canadian energy exports, which could raise prices for heating, electricity, and fuel for American consumers [15]. - ETFs like United States Natural Gas Fund (UNG) and Energy Select Sector SPDR Fund (XLE) are expected to be adversely affected [15].

Business Model - Costco operates as a club store, requiring customers to pay a membership fee to shop, which significantly alters the retail dynamic [1] - Membership fees generated nearly $1.2 billion in revenue, contributing over half of Costco's operating income of approximately $2.2 billion in the fiscal first quarter of 2025 [2][3] Financial Performance - In the fiscal first quarter, Costco's top line grew by 7.5%, with same-store sales increasing by 5.2% [5] - Earnings per share rose to $4.04, up from $3.58 in the same quarter of the previous year, indicating strong performance [5] - Store traffic increased by 5.1%, suggesting that membership fee-paying customers are returning to make more purchases [5] Membership Retention - Costco maintains a high member retention rate of over 90%, indicating effective customer satisfaction strategies [3] - The company leverages its membership fees to offer competitive pricing, enhancing customer loyalty [3] Valuation Concerns - Costco's stock is currently within 5% of its all-time highs, leading to a lower dividend yield and suggesting an expensive valuation [7] - Traditional valuation metrics, such as price-to-sales and price-to-earnings ratios, are above their five-year averages, indicating a steep price [8] - Historical analysis shows that Costco's valuation ratios are near the highest levels in the company's history, suggesting the stock is historically expensive [9] Investment Outlook - Despite Costco's strong business fundamentals, the current stock price may not present a good investment opportunity [9] - The stock has experienced significant drawdowns in the past, indicating potential future price declines that could create a buying opportunity [10]

Group 1 - The article emphasizes the long-term growth and dividend growth investing strategy, focusing on identifying undervalued stocks and high-quality companies that provide cash for reinvestment [2] - Profitability is highlighted as a safer driver of gains compared to low valuation, with a strong emphasis on margins, free cash flow stability and growth, and returns on invested capital [2] - The author expresses a commitment to thorough research on high-quality companies, indicating a deep interest in understanding their business models and financial health [2] Group 2 - The article includes a disclosure stating that the author has a beneficial long position in Costco shares, indicating a personal investment interest in the company [3] - It is noted that the article reflects the author's own opinions and is not influenced by compensation from any company mentioned [3] - Seeking Alpha's disclosure clarifies that past performance does not guarantee future results and that the views expressed may not represent the platform as a whole [4]

Core Insights - Costco Wholesale has significantly outperformed the S&P 500, with stock performance exceeding the index by nearly 150 percentage points over the past five years and more than tripling the market's return over the last decade [1] Financial Performance - In Q1 of fiscal 2025, Costco reported a 5% increase in comparable-store sales and traffic compared to Q1 2024, contributing to an 8% revenue growth and a 13% net income growth [4][5] - Membership revenue reached $1.2 million in Q2, reflecting an 8% increase from the previous year, with over 77 million paid memberships and 139 million total cardholders as of Q1 2025 [7] Membership Fees and Future Revenue - Costco raised membership fees by 8% in September, a strategy employed every few years, which is expected to enhance revenue in the coming quarters [8] - The current valuation metrics may not fully reflect the future potential due to the delayed impact of the increased membership fees [8] Asset Ownership - As of the end of fiscal 2024, Costco owned 79% of its land and buildings, a factor often overlooked when assessing the stock's valuation [9] Valuation Considerations - Despite the strong financial results, Costco's stock trades at a premium, currently at 62 times trailing earnings, slightly below its 10-year high of 63 [2] - The current price is considered beyond fair value, leading to a cautious initial investment approach, with the potential for future position increases as more compelling value points arise [10][11]

ToplineAfter the People’s Union called for consumers to halt all online shopping on Feb. 28 in an “Economic Blackout,” Target lost that day in website visitors compared with mid-February Friday traffic, while Costco powered through with a 22% uptick, according to exclusive data from website analytics platform Similarweb.On Feb. 28 blackout day, Target website visitors dropped 9% compared to Friday, Feb. 14, from 5.2 ... [+] million to 4.7 million. (Photo Illustration by Pavlo Gonchar/SOPA Images/LightRocket ...