Costco(US:COST)2025-08-07 05:17Summary of Costco Wholesale (COST) July Sales Conference Call Company Overview - Company: Costco Wholesale (COST) Key Points and Arguments 1. Sales Performance: - July same-store sales (SSS) excluding gas and foreign exchange (FX) increased by 7.0%, surpassing consensus expectations of 5.7% and up from 6.2% in June [1] - U.S. comparable sales (ex-gas) were reported at 6.5%, exceeding consensus of 5.6% and 5.5% in June [1] 2. Traffic Trends: - Worldwide traffic grew by 4.3% in July, compared to 3.4% in June [2] - U.S. traffic also accelerated to 4.3% from 2.8% in June [2] 3. Ticket Size: - Global ticket size (ex-gas/FX) increased by 2.6%, slightly down from 2.8% in June [2] - U.S. ticket size (ex-gas) was reported at 2.2%, down from 2.7% in June [2] 4. Cannibalization Impact: - The company noted a negative impact from cannibalization of approximately 50 basis points in July [1] 5. Category Performance: - Fresh food sales were up high single digits (HSD), with notable strength in meat and bakery [9] - Food & Sundries grew mid single digits (MSD), driven by cooler, candy, and food items [9] - Non-foods increased HSD, particularly in gift cards, jewelry, and men's apparel [9] - Ancillary business saw a decrease in low single digits (LSD), with pharmacy, optical, and hearing aids being top performers [9] Valuation and Risks 1. Investment Rating: - Costco is rated as a Buy with a 12-month price target of $1,133, indicating an upside potential of 17.0% from the current price of $968.56 [10][12] 2. Financial Projections: - Projected revenue for FY 2025 is $254.45 billion, increasing to $310.24 billion by FY 2027 [12] - Projected EBITDA for FY 2025 is $11.52 billion, growing to $15.45 billion by FY 2027 [12] 3. Risks: - Potential risks include competition from grocery, convenience, big-box, and e-commerce sectors; commodity and FX headwinds; softening consumer demand; macroeconomic challenges; and supply chain issues [10] Additional Important Information - Market Capitalization: Approximately $430 billion [12] - Enterprise Value: Approximately $421.7 billion [12] - Earnings Per Share (EPS): Projected EPS for FY 2025 is $16.56, increasing to $21.51 by FY 2027 [12] - Debt Metrics: Net debt to EBITDA ratio is projected to be negative, indicating a strong balance sheet [12] This summary encapsulates the key insights from the conference call regarding Costco's sales performance, traffic trends, category performance, valuation, risks, and additional financial metrics.