Core Viewpoint - Costco Wholesale has consistently outperformed the broader market, generating a total return of 33% over the past 12 months, significantly ahead of the S&P 500's 9% [1] Financial Performance - In Q2 of fiscal 2025, Costco reported a net sales increase of 9.1%, driven by a same-store sales gain of 6.8%, primarily due to higher foot traffic [3] - Strong demand was noted across various categories, including gold and jewelry, gift cards, toys, and home furnishings, with all categories showing double-digit growth [4] - The membership model has proven effective, with a 6.8% year-over-year increase in membership base and a 93% renewal rate in the U.S. and Canada [5] Market Position and Resilience - Despite economic uncertainties, Costco is viewed as recession-resistant due to its broad product offerings at low prices, making it an all-weather business [8] - The company has maintained a strong growth trajectory, with diluted earnings per share (EPS) increasing at a compound annual rate of 11.5% over the past decade [6] Stock Performance Outlook - While Costco has a strong historical performance, predicting its stock performance over the next 12 months is challenging [9] - The stock currently trades at a price-to-earnings ratio of 56.3, which is considered high given its EPS growth of 16.9% in fiscal 2024 and a forecasted 12.2% gain for the current fiscal year [10] - There is a belief that the stock may underperform the S&P 500 despite the potential for higher prices in the future [10]

Core Viewpoint - The current market uncertainty, primarily due to tariff announcements from the Trump administration, has negatively impacted investor sentiment, with the S&P 500 trading approximately 9% below its February peak [1] Company Performance - Costco has shown impressive performance with a total return of 224% over the past five years, despite its shares being 16% below their record high set in February [2] - For fiscal 2025 second quarter, Costco reported a same-store sales (comps) growth of 6.8%, continuing a streak of consistent growth even during challenging economic conditions [3][4] - The company's diluted earnings per share (EPS) have increased at a compound annual growth rate of 11.5% over the past decade, with expectations for the same growth rate between fiscal 2024 and fiscal 2027 [4] Competitive Position - Costco's scale and operational efficiency contribute significantly to its success, with net sales of $62.5 billion in the second quarter, making it the third largest retailer globally [6] - The company maintains a competitive edge by offering everyday low prices, supported by a membership base of 78.4 million households, which grew by 6.8% year-over-year and boasts a 93% renewal rate in the U.S. and Canada [7] Market Dynamics - Despite competition from Amazon and its Prime membership, Costco has consistently grown its membership, revenue, and EPS, indicating strong consumer preference for in-person shopping [8] - The current valuation of Costco shares is high, with a price-to-earnings ratio of 52.6, leading to skepticism about the potential for similar investment returns as seen in the past [9][10]

Core Viewpoint - Investors navigated a volatile trading week influenced by tariff rhetoric from the Trump administration, leading to weekly stock losses despite a rally on Friday [1] Group 1: Zscaler - Zscaler, a cloud-based cybersecurity company, is recognized for its Zero Trust Exchange platform, which protects users and applications from cyber threats [3] - The company reported strong second-quarter results for fiscal 2025, driven by the adoption of Zero Trust and artificial intelligence [3][4] - Analyst Shaul Eyal from TD Cowen reiterated a buy rating with a price target of $270, citing a revamped go-to-market strategy and improved sales productivity [4] - Zscaler's annual contract value from its AI Analytics portfolio nearly doubled year over year, with expectations to reach $3 billion in annual recurring revenue by the end of fiscal 2025 [5] - The company serves 14 of the 15 U.S. cabinet agencies and is expected to benefit from government efficiency initiatives [6] - The number of customers generating over $1 million in annual recurring revenue increased by 25% year over year to 620 [6] Group 2: Costco Wholesale - Costco Wholesale reported mixed results for the second quarter of fiscal 2025, with revenue exceeding expectations but earnings missing estimates [8] - Analyst Corey Tarlowe from Jefferies noted that the earnings miss was due to lower-than-expected gross margin expansion and forex headwinds, but highlighted strong comparable sales growth of 8.3% [9][10] - Costco's U.S. sales benefited from increased traffic and ticket growth, and the company has opportunities for further warehouse expansion [11] - The company confirmed that about one-third of its U.S. sales are imported, with less than half sourced from China, Mexico, and Canada, which may insulate it from tariff impacts [11][12] - Tarlowe raised the price target for Costco stock to $1,180 from $1,145 while maintaining a buy rating [12] Group 3: Karman Holdings - Karman Holdings, a defense and space systems manufacturer, recently went public and offers a diverse range of products [14] - Analyst Amit Daryanani from Evercore initiated coverage with a buy rating and a price target of $38, citing strong growth potential driven by various secular tailwinds [15] - Daryanani highlighted growth in U.S. orbital launch volume and increased focus on missile defense as key drivers for Karman's growth [16] - Fiscal 2025 sales are expected to grow 18% year over year to $409 million, with EPS projected at 36 cents and an EBITDA margin expansion to 31% [16]

Core Viewpoint - Costco Wholesale Corp has experienced a significant stock price decline of nearly 15% from its peak, primarily due to a broader market sell-off and a slight earnings miss, despite strong revenue growth [1][5][6] Group 1: Stock Performance and Forecast - The current stock price of Costco is $903.92, with a 12-month price forecast averaging $1,030.43, indicating a potential upside of 14% [1] - Analysts have set a high forecast of $1,175.00 and a low forecast of $890.00 for Costco's stock [1] - The stock has been on a rally since late 2022, reaching an all-time high in February before the recent decline [1][5] Group 2: Earnings Report Analysis - Costco's latest earnings report showed a revenue increase of 9% year-over-year, reaching a new record, but earnings per share (EPS) fell short of expectations at $4.02 compared to the anticipated $4.11 [4][5] - The earnings miss, while not massive, contributed to the stock's decline amid a broader market downturn, with the S&P 500 down nearly 10% [5][6] Group 3: Analyst Sentiment and Technical Indicators - Despite the recent sell-off, many analysts maintain a bullish outlook on Costco, with several firms reaffirming Buy ratings and increasing price targets, such as Evercore ISI raising its target to $1,070 [7][8] - Technical indicators suggest that Costco is currently in oversold territory, with an RSI of 30, indicating a potential for a rebound [10] - The stock is trading near a long-term support line, suggesting that a bottom could be forming, which may attract buyers [11] Group 4: Investment Opportunity - The recent pullback in Costco's stock may present a compelling buying opportunity for long-term investors, as analysts believe the reaction to the earnings miss has been overdone [3][12] - The combination of strong revenue growth and a defensive business model positions Costco well to navigate market volatility [9][12]

Core Viewpoint - Costco Wholesale is a well-established retailer with strong growth potential, particularly in international markets, but its high valuation may limit future returns [2][4][5]. Group 1: Company Performance - Costco has consistently demonstrated robust growth, achieving nearly double-digit growth rates over the past decade, even during challenging economic conditions such as the pandemic and inflation [2][3]. - The company has seen its stock price increase by 520% over the last 10 years, indicating strong investor confidence and performance [4]. Group 2: Market Presence - The majority of Costco's warehouses, 767 out of 897, are located in North America, with significant room for expansion in international markets, particularly in China where it currently operates only seven warehouses [3]. - The long-term growth opportunities in international markets position Costco as a potential top growth stock for the future [3]. Group 3: Valuation Concerns - Costco's stock is currently trading at over 50 times trailing earnings, which is considered expensive given its single-digit growth rate [5]. - The elevated price-to-earnings multiple may lead to a decline in stock price if the company fails to meet high expectations as growth rates normalize [6]. Group 4: Investment Outlook - For Costco to turn a $25,000 investment into $1 million over 25 years, it would require a market cap increase to $16.6 trillion, which is deemed unlikely [7]. - While Costco remains a solid stock for long-term holding, investors should manage their expectations regarding future gains [8].

| Costco quarterly results wrap | | | | | | | | | | | | | | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | $ '00 mn | 1023 | 2024 | 3024 | 4024 | 1025 | 2025 | 2025E | 2023 | 3025 | 4023 | 1024 | Var. | Total revenue | 544 | ਦੇ ਫੇ ਤੇ | ਦੇਤ ਦ | 789 | 578 | ਦੇ8 4 | રે 8 ટ | 797 | 622 | 637 | ୧30 | 1.1% | | 8.196 | ર રેત્રેસ | 2.0% | ਰੇਂ ਦੇ ਦੇ | 6.2% | 5.7% | 9.1% | 1.0% | 7. ...

About this content About Emily Jarvie Emily began her career as a political journalist for Australian Community Media in Hobart, Tasmania. After she relocated to Toronto, Canada, she reported on business, legal, and scientific developments in the emerging psychedelics sector before joining Proactive in 2022. She brings a strong journalism background with her work featured in newspapers, magazines, and digital publications across Australia, Europe, and North America, including The Examiner, The Advocate, ...

Costco Wholesale (NASDAQ: COST ) (TSX: COST:CA ) just reported its Fiscal Q2-2025 earnings results, and the results looked good overall -- no surprise there. EPS slightly missed expectations, but revenue beat expectations slightly. The stock fell by 1.2% in the after-hours session after theI objectively search for undervalued stocks of any size across a wide variety of industries using quantitative methods that I've thoroughly backtested for success. I believe the numbers are more important than the story ( ...

Financial Data and Key Metrics Changes - Net income for Q2 2025 was $1.788 billion or $4.02 per diluted share, up from $1.743 billion or $3.92 per diluted share in the same quarter last year, representing an 8.4% growth when excluding a prior year tax benefit [17][18] - Operating income increased by 12.3% year-over-year, while net sales rose to $62.53 billion, a 9.1% increase from $57.33 billion [21][18] - Membership fee income grew by $82 million or 7.4% year-over-year, with a 9.4% increase when excluding foreign exchange impacts [25][26] Business Line Data and Key Metrics Changes - US comparable sales increased by 8.3%, while Canada comp sales rose by 4.6% and other international comp sales were up by 1.7% [21] - E-commerce comp sales surged by 20.9%, indicating strong growth in online sales [22] - Traffic increased by 5.7% worldwide and 5.6% in the US, with average transaction value up by 1% globally [23] Market Data and Key Metrics Changes - Foreign exchange negatively impacted sales by approximately 2.1%, while gas price deflation had a minor impact of about 0.1% [22] - The average wage for US and Canada employees is now over $31 per hour, reflecting the company's commitment to employee compensation [12] Company Strategy and Development Direction - The company plans to open 28 new warehouses in fiscal year 2025, with a focus on expanding gas station hours to enhance member convenience [9][10] - The company aims to leverage its global buying power and strong supplier relationships to maintain value for members amid inflation and potential tariff impacts [14] - The strategy includes a focus on enhancing the Kirkland Signature brand and expanding local sourcing to reduce costs [42][43] Management's Comments on Operating Environment and Future Outlook - Management noted that consumers remain focused on quality and value, with a willingness to spend, although they are becoming more selective [66][67] - The company is prepared to manage potential tariff impacts and is closely monitoring the situation [86][87] - Management expressed confidence in the long-term growth prospects of international markets, with plans for continued expansion [101][102] Other Important Information - Capital expenditures for Q2 were approximately $1.14 billion, with an estimated full-year CapEx of around $5 billion [38] - The company reported a slight increase in gross margin, with a reported rate of 10.85% [29] Q&A Session Summary Question: Impact of consumer behavior on discretionary and non-discretionary spending - Management indicated that consumers are still willing to spend but are more selective, particularly in food categories [66][67] Question: Core margin trends and inflationary pressures - Management stated that while core on core margins were down slightly, overall gross margin improved, and they are focused on maintaining value for members [77][78] Question: Weather impact on sales - Management acknowledged some weather-related impacts but noted recovery in sales [85] Question: Tariff management strategies - Management indicated a dual approach of absorbing costs where possible and passing on necessary increases to consumers [86][87] Question: Kirkland Signature product introductions - Management highlighted opportunities in non-food categories and emphasized a strategic approach to new product launches [120][121] Question: Wage pressures and productivity opportunities - Management confirmed that while wage increases present a headwind, they are focused on improving productivity to offset these costs [133][134]

2nd Quarter FY 2025 Q2 Highlights - Sales $62.5B Net Sales +9.1% Growth +6.8% Comparable Sales +9.1% +5.7% +1.0% Comparable Ticket Supplemental Information 1 Comparable Traffic +3.2% Adjusted Comparable Ticket1 +20.9% E-Comm Comparable Sales +22.2% Adjusted E-Comm Comparable Sales2 1 - Excluding impacts from changes in gasoline prices and foreign exchange 2 - E-commerce Comparable Sales excluding impacts from FX 2 Adjusted Comparable Sales1 Q2 Highlights – Sales - Segment Reporting | Comp Sales | US | Canad ...