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 ...

Core Viewpoint - Costco is expected to report strong second-quarter fiscal 2025 earnings, driven by strategic investments, customer-centric initiatives, and a focus on membership growth, making it a resilient consumer defensive stock [2][19]. Financial Performance Expectations - The Zacks Consensus Estimate for second-quarter revenues is $63.2 billion, reflecting an 8.2% increase year-over-year, while the earnings estimate has improved to $4.09 per share, indicating a 10.2% year-over-year jump [3][19]. - Costco has a trailing four-quarter earnings surprise of 2% on average, with the last quarter surpassing the Zacks Consensus Estimate by 0.8% [6]. Growth Strategies and Market Position - Costco's competitive pricing, bulk purchasing power, and efficient inventory management contribute to its ability to maintain low prices and steady store traffic, with expected comparable sales growth of 4.3% in the second quarter [10][9]. - High membership renewal rates, exceeding 90%, provide a reliable revenue stream, with membership fees anticipated to increase by 8.1% during the quarter [11][19]. - E-commerce comparable sales are projected to rise by 18.5%, reflecting Costco's adaptability to market demands and ongoing expansion efforts [13]. Stock Performance and Valuation - Costco's stock has increased by 17.8% over the past six months, outperforming the industry average of 8.9% and competitors like Ross Stores, Dollar General, and Target [15]. - The company's forward 12-month price-to-earnings (P/E) ratio is 55.59, significantly higher than the industry average of 33.05 and the S&P 500's 21.96, indicating a premium valuation [16]. Investment Considerations - Costco's strong membership model, competitive pricing, and growth potential suggest it remains an attractive investment, despite its premium valuation [18][19]. - Current investors may consider holding or adding to their positions, while new investors might view any price dips as buying opportunities [18].

Core Viewpoint - Costco Wholesale is set to report its fiscal second-quarter results, with expectations for continued growth despite a challenging market environment [1][2]. Financial Performance Expectations - Analysts predict an 8% revenue increase, reaching $63 billion for the 12-week period ending mid-February, with a modest profit forecast of $4.10 per share, reflecting less than a 5% year-over-year increase [4]. - Costco's total sales rose by 9.2% in December and 9.9% in January, with domestic comparable sales remaining above 9% [5]. - Analyst estimates for quarterly profit have gradually increased from $4.01 to $4.10 over the past three months, indicating positive sentiment [5]. Membership Fee Adjustments - Costco recently increased its membership fees, with the Gold Star plan rising from $60 to $65 and the Executive tier from $120 to $130, marking the smallest percentage increase since 1983 [6]. - Membership fees contribute approximately 2% of total sales but are crucial for profitability, translating into a significant portion of the bottom line [7]. Historical Context and Leadership - Costco has maintained positive top-line growth for over three decades, with only one year of decline during the Great Recession [9][10]. - CEO Ron Vachris, a long-time employee, has ensured continuity in leadership and operational strategy [10]. Market Position and Valuation - Costco's stock is currently valued at 57 times this fiscal year's net income projection, indicating a premium valuation compared to fundamentals [9]. - Historical performance suggests that betting against Costco has not been successful, reinforcing confidence in its market position [11].

Core Insights - Costco's dividend has consistently increased since its introduction in 2004, with a recent special dividend of $15 per share in January 2024 [1] - The current dividend payout is $4.64 per share, supported by strong free cash flow of approximately $2.2 billion in Q1 fiscal 2025 [3] - Despite the consistent dividend growth, the yield is only 0.4%, significantly lower than the S&P 500 average of 1.25% [4] Dividend Analysis - Costco's dividend yield is low compared to competitors, with Walmart at 0.9% and Target at 3.5% [5] - In 2024, shareholders received $19.50 per share in total dividend income, but the yield remains below 1.9% when considering the current share price [4] - The company has a history of increasing dividends, having raised its payout for 21 consecutive years [10] Stock Performance - Costco's stock price increased over 40% last year, outperforming the S&P 500 [6] - The company operates 890 warehouses globally, with plans to open 29 more in fiscal 2025 and a renewal rate of 91% [7] - Fiscal 2024 net income reached $7.4 billion, a 17% increase year-over-year, with profits rising 13% in Q1 fiscal 2025 [8] Valuation Concerns - The current P/E ratio is at an all-time high of 62, raising concerns about valuation sustainability [8][12] - Analysts forecast only 13% annual profit growth for fiscal 2025, which may not justify the high earnings multiple [9] - The low dividend yield and high valuation suggest that investors may find better returns in other retail stocks [12]

Core Viewpoint - The consumer staples sector is demonstrating resilience amid a broader market downturn, outperforming the S&P 500 and breaking through previous resistance levels [1][2]. Group 1: Market Performance - The S&P 500 ETF has declined nearly 3% in a week, with most sectors following this downward trend due to rising economic uncertainty [1]. - The Consumer Staples Select Sector SPDR Fund (XLP) has outperformed the broader market, showcasing its defensive nature during turbulent times [2][3]. Group 2: Sector Characteristics - Consumer staples include essential goods such as food, beverages, household items, and personal care products, which maintain steady demand regardless of economic conditions [2]. - This sector is considered a "defensive" investment, providing consistent revenue and earnings, especially when growth stocks falter [3][4]. Group 3: Investment Opportunities - The XLP ETF offers diversified exposure to the consumer staples sector with a low expense ratio of 0.09% and a dividend yield of 2.2%, making it a cost-effective choice for long-term investors [6]. - Costco Wholesale, as XLP's largest holding, has seen its stock rise over 43% in the past year, with a projected EPS of $4.09 for its upcoming earnings report [8][9]. - Philip Morris International has surged 72% over the past year, with a robust dividend yield of 3.43% and strong earnings guidance for 2025, driven by a significant increase in oral product shipments [10][11].

Group 1 - Costco is opening nine new warehouse stores globally this year, with six in the U.S. set to open in March 2025 [1] - New store locations in the U.S. include Brentwood, Highland, Prosper, Weatherford, Genesee County, and Sharon, with additional openings in Stuart, Florida, and Minami Alps, Japan [1] - The company plans to open a Costco in Ardeer, Australia later this year, although no specific date has been provided [3] Group 2 - Costco's CEO announced a projection of 29 openings during fiscal year '25, including 26 net new buildings, with 10 warehouses outside the U.S. [5] - The retailer reported net sales of $19.51 billion for January, reflecting a 9.2% increase from the previous year [5] - Currently, Costco operates 897 warehouses worldwide, with growth opportunities identified in Canada, Mexico, Europe, and Asia [6]

Group 1 - The momentum trade has shifted from large-cap technology and AI-focused companies to unexpected players such as Walmart and Costco, along with some major banks [1] Group 2 - The article emphasizes the importance of thematic investing and market events, highlighting the need for financial narratives that resonate with everyday investors [1] - It discusses the role of macro drivers in various asset classes, including stocks, bonds, commodities, currencies, and cryptocurrencies [1] - The use of empirical data and charts is noted as a method to effectively communicate financial information [1]

Core Viewpoint - Costco's stock experienced a decline of 2.6% due to negative news from rival Walmart, despite Costco's usual strong performance in the market [1]. Group 1: Company Performance - Walmart reported its fourth-quarter and full-year fiscal 2025 financial results, showing decent year-over-year growth in revenue, but a decline in net income [2]. - Walmart's profitability guidance for fiscal 2026 fell short of analyst expectations, impacting market sentiment towards Costco as well [2]. Group 2: Market Dynamics - Costco operates on a membership model, contrasting with Walmart's open supermarket format, yet both companies are affected by the same retail environment [3]. - Concerns about one retailer can lead to market reactions that impact others in the same sector, as seen with Costco's stock movement following Walmart's results [3]. Group 3: Investor Sentiment - Despite the negative impact from Walmart's results, there are positive indicators in Walmart's performance, such as a 16% year-over-year growth in international e-commerce and overall revenue growth exceeding 4% [4]. - The overall sentiment remains bullish on large retail companies, including both Costco and Walmart [4].

Core Viewpoint - Growth investors are focused on stocks with above-average financial growth, but identifying such stocks can be challenging due to associated risks and volatility [1] Group 1: Growth Stock Identification - The Zacks Growth Style Score simplifies the process of finding promising growth stocks by analyzing a company's real growth prospects beyond traditional metrics [2] - Costco (COST) is highlighted as a recommended stock with a favorable Growth Score and a top Zacks Rank [2] Group 2: Earnings Growth - Earnings growth is a critical factor for growth investors, with double-digit growth being particularly attractive [4] - Costco's historical EPS growth rate is 16.2%, with a projected EPS growth of 11.9% this year, surpassing the industry average of 10.7% [5] Group 3: Asset Utilization - The asset utilization ratio, or sales-to-total-assets (S/TA) ratio, is an important indicator of efficiency in growth investing [6] - Costco's S/TA ratio is 3.73, indicating that the company generates $3.73 in sales for every dollar in assets, significantly higher than the industry average of 1.46 [6] Group 4: Sales Growth - Sales growth is another key factor, with Costco expected to achieve a sales growth of 7.4% this year, compared to the industry average of 5.5% [7] Group 5: Earnings Estimate Revisions - Positive trends in earnings estimate revisions are correlated with stock price movements [8] - Costco has seen upward revisions in current-year earnings estimates, with a 0.1% increase in the Zacks Consensus Estimate over the past month [8] Group 6: Overall Positioning - Costco has earned a Growth Score of A and carries a Zacks Rank 2 due to positive earnings estimate revisions, positioning it well for outperformance [10]

Group 1: Macroeconomic Indicators - January CPI increased by 3.0% year-on-year, exceeding expectations of 2.9% and the previous value of 2.9%, marking the highest level in seven months [7] - Core CPI rose by 3.3% year-on-year, higher than the expected 3.1% and previous 3.2% [7] - January PPI year-on-year was 3.5%, matching the previous value and exceeding the expected 3.2% [7] Group 2: Market Performance - S&P 500 index rose by 1.5% last week, while the Nasdaq China Golden Dragon Index surged by 7.3%, marking the highest increase globally [20] - Among the 36 secondary sectors in the U.S. stock market, 27 sectors saw gains, with the top five performing sectors being Electrical Equipment, Real Estate Investment Trusts, Durable Goods, Pharmaceuticals, and Household Products [23] Group 3: Company Performance - 76% of S&P 500 companies reported actual EPS above expectations, slightly below the 5-year average of 77% but above the 10-year average of 75% [5] - Notable companies with significant stock price increases include AMD, Intel, and Airbnb, contributing to the overall positive performance of the S&P 500 [26]