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Costco's Sturdy Pillars Help Stock Ascend 19% in 6 Months
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Costco Wholesale Corporation (COST - Free Report) seems somewhat unfazed by the tough retail scenario. While major chains are grappling with sluggish store and mall traffic as consumers switch to online shopping, this Issaquah, WA-based company seems rather resilient to the challenging retail backdrop. The company’s growth strategies, sturdy comparable-store sales (comps) performance, strong membership trends and higher penetration of Citi Visa co-brand card program are the pillars that reinforce its position.
Notably, shares of this Zacks Rank #3 (Hold) company have advanced 19.2% in the past six months compared with the industry’s growth of 15.8%. Further, the stock is hovering close to its 52-week high of $199.88. There is no doubt why Costco, which shares space with Target (TGT - Free Report) , could not breach that mark in the near term.
Costco continues to be one of the dominant retail wholesalers based on the breadth and quality of merchandise offered. In fact, the strategy to sell products at heavily discounted prices has helped it to remain on growth track. It is also steadily expanding e-commerce capabilities in the United States, Canada, the U.K., Mexico, Korea and Taiwan. As a result, comparable e-commerce sales have surged 33.2%, 38.1% and 34.8% in March, February and January, respectively.
Additionally, a differentiated product range enables Costco to provide an upscale shopping experience for its members, consequently resulting in market share gains and higher sales per square foot. Notably, membership fees have increased 12.6% and 9.8% in the second and first quarter of fiscal 2018, respectively.
We noted that total revenue grew 10.8% and 13.2% during the second and first quarter of fiscal 2018, respectively. Earnings per share improved 21.4% and 16.2% in the respective quarters.
Analysts polled by Zacks expect third-quarter and fiscal 2018 revenues to come in at $31.62 billion and $139.34 billion, reflecting an increase of roughly 9.6% and 8%, respectively. The Zacks Consensus Estimate for earnings is currently pegged at $1.67 for the third quarter and $6.86 for the fiscal, reflecting an improvement of approximately 19.3% and 17.9%, respectively.
Certainly, Costco’s sound fundamentals place the stock favorably in 2018.
Dollar General (DG - Free Report) delivered an average positive earnings surprise of 2.3% in the trailing four quarters. It has a long-term earnings growth rate of 14.6% and a Zacks Rank #2.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Costco's Sturdy Pillars Help Stock Ascend 19% in 6 Months
Costco Wholesale Corporation (COST - Free Report) seems somewhat unfazed by the tough retail scenario. While major chains are grappling with sluggish store and mall traffic as consumers switch to online shopping, this Issaquah, WA-based company seems rather resilient to the challenging retail backdrop. The company’s growth strategies, sturdy comparable-store sales (comps) performance, strong membership trends and higher penetration of Citi Visa co-brand card program are the pillars that reinforce its position.
Notably, shares of this Zacks Rank #3 (Hold) company have advanced 19.2% in the past six months compared with the industry’s growth of 15.8%. Further, the stock is hovering close to its 52-week high of $199.88. There is no doubt why Costco, which shares space with Target (TGT - Free Report) , could not breach that mark in the near term.
Costco continues to be one of the dominant retail wholesalers based on the breadth and quality of merchandise offered. In fact, the strategy to sell products at heavily discounted prices has helped it to remain on growth track. It is also steadily expanding e-commerce capabilities in the United States, Canada, the U.K., Mexico, Korea and Taiwan. As a result, comparable e-commerce sales have surged 33.2%, 38.1% and 34.8% in March, February and January, respectively.
Additionally, a differentiated product range enables Costco to provide an upscale shopping experience for its members, consequently resulting in market share gains and higher sales per square foot. Notably, membership fees have increased 12.6% and 9.8% in the second and first quarter of fiscal 2018, respectively.
We noted that total revenue grew 10.8% and 13.2% during the second and first quarter of fiscal 2018, respectively. Earnings per share improved 21.4% and 16.2% in the respective quarters.
Analysts polled by Zacks expect third-quarter and fiscal 2018 revenues to come in at $31.62 billion and $139.34 billion, reflecting an increase of roughly 9.6% and 8%, respectively. The Zacks Consensus Estimate for earnings is currently pegged at $1.67 for the third quarter and $6.86 for the fiscal, reflecting an improvement of approximately 19.3% and 17.9%, respectively.
Certainly, Costco’s sound fundamentals place the stock favorably in 2018.
2 Key Picks in the Retail Space
Burlington Stores (BURL - Free Report) delivered an average positive earnings surprise of 15% in the trailing four quarters. It has a long-term earnings growth rate of 18.6% and a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Dollar General (DG - Free Report) delivered an average positive earnings surprise of 2.3% in the trailing four quarters. It has a long-term earnings growth rate of 14.6% and a Zacks Rank #2.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>