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Costco (COST) Deserves Your Attention: A Peek Into the Stock
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Costco Wholesale Corporation (COST - Free Report) , an esteemed player in the retail discount sector, has showcased a robust performance in the stock market year to date. Driven by its strategic operational endeavors, including a customer-centric business approach, a strong emphasis on its membership program and a commitment to delivering value-oriented offerings, the company's stock has surged ahead of the Zacks Retail-Discount industry.
Being a consumer defensive stock, Costco has been surviving the market turmoil pretty well. Year to date, shares of this Zacks Rank #3 (Hold) company have rallied about 22.5%, significantly outpacing the industry's modest growth of 5.6%.
A Dominant Warehouse Retailer
This Issaquah, WA-based company continues to be one of the dominant warehouse retailers based on the expanse and quality of merchandise offered. The company's distinctive membership business model and pricing power set it apart from traditional players. Low-to-middle-income consumers have preferred discount stores over conventional retailers to meet their day-to-day needs. Cumulatively, these factors have been aiding Costco in registering decent sales numbers.
Costco’s net sales increased 4.5% to $17.60 billion for the retail month of July — the four-week period ended Jul 30, 2023 — from $16.85 billion last year. Comparable sales for the retail month under discussion increased 2.5%. Costco attained net sales growth of 1.9% in the third quarter of fiscal 2023. Traffic or shopping frequency rose 4.8% globally and 3.5% in the United States.
No wonder, the company’s total paid members have been rising. Its growing customer base and high renewal rates have been fueling sales. Membership fees increased 6.1% to $1,044 million in the third quarter. The company ended the quarter with 69.1 million paid household members and 124.7 million cardholders.
Image Source: Zacks Investment Research
Market Penetration
Through a calculated approach that involves identifying untapped markets and tailoring offerings to meet customer preferences, Costco has managed to deepen its roots. This retail bellwether has been steadily expanding its footprint through new club openings in the domestic and international markets. Costco also operates e-commerce sites in the United States, Canada, the U.K., Mexico, Korea, Taiwan, Japan and Australia.
As of Aug 2, 2023, Costco operates 858 warehouses, including 590 in the United States and Puerto Rico, 107 in Canada, 40 in Mexico, 32 in Japan, 29 in the United Kingdom, 18 in Korea, 15 in Australia, 14 in Taiwan, four each in China and Spain, two in France and one each in Iceland, New Zealand and Sweden.
Costco also remains committed to opening new clubs in the domestic and international markets. In our view, the company’s diversification strategy is a natural hedge against risks that may arise in specific markets. After opening 13, 20 and 23 net new warehouses in fiscal 2020, 2021 and 2022, respectively, Costco plans to open 23 net new units in fiscal 2023. We foresee an improvement in membership fees as new warehouse openings ramp up.
Wrapping Up
A favorable product mix, steady store traffic, pricing power and a strong liquidity position should help Costco continue outperforming. The strategy to sell products at discounted prices has helped Costco draw customers who have been seeking both value and convenience amid rising prices. The Zacks Consensus Estimate for Costco’s current financial-year sales and EPS suggests growth of 6.7% and 9.5%, respectively, from the year-ago reported numbers.
3 Picks You Can't Miss Out On
Here we have highlighted three better-ranked stocks, namely Grocery Outlet (GO - Free Report) , The TJX Companies (TJX - Free Report) and Celsius Holdings (CELH - Free Report) .
Grocery Outlet, the extreme value retailer of quality, name-brand consumables and fresh products, currently sports a Zacks Rank #1 (Strong Buy). The expected EPS growth rate for three to five years is 12.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Grocery Outlet’s current financial-year sales and earnings suggests growth of 10.6% and 2.9%, respectively, from the year-ago reported numbers. GO has a trailing four-quarter earnings surprise of 14.3%, on average.
The TJX Companies, the leading off-price apparel and home fashions retailer, currently carries a Zacks Rank #2 (Buy). The expected EPS growth rate for three to five years is 10.8%.
The Zacks Consensus Estimate for The TJX Companies’ current financial-year sales and earnings suggests growth of 6.5% and 15.4%, respectively, from the year-ago reported numbers. TJX has a trailing four-quarter earnings surprise of 6.6%, on average.
Celsius Holdings, which offers functional drinks and liquid supplements, currently carries a Zacks Rank #2. CELH delivered an earnings surprise of 100% in the last reported quarter.
The Zacks Consensus Estimate for Celsius Holdings’ current fiscal-year sales and earnings suggests growth of 87.6% and 168.8%, respectively, from the year-ago reported numbers.
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Costco (COST) Deserves Your Attention: A Peek Into the Stock
Costco Wholesale Corporation (COST - Free Report) , an esteemed player in the retail discount sector, has showcased a robust performance in the stock market year to date. Driven by its strategic operational endeavors, including a customer-centric business approach, a strong emphasis on its membership program and a commitment to delivering value-oriented offerings, the company's stock has surged ahead of the Zacks Retail-Discount industry.
Being a consumer defensive stock, Costco has been surviving the market turmoil pretty well. Year to date, shares of this Zacks Rank #3 (Hold) company have rallied about 22.5%, significantly outpacing the industry's modest growth of 5.6%.
A Dominant Warehouse Retailer
This Issaquah, WA-based company continues to be one of the dominant warehouse retailers based on the expanse and quality of merchandise offered. The company's distinctive membership business model and pricing power set it apart from traditional players. Low-to-middle-income consumers have preferred discount stores over conventional retailers to meet their day-to-day needs. Cumulatively, these factors have been aiding Costco in registering decent sales numbers.
Costco’s net sales increased 4.5% to $17.60 billion for the retail month of July — the four-week period ended Jul 30, 2023 — from $16.85 billion last year. Comparable sales for the retail month under discussion increased 2.5%. Costco attained net sales growth of 1.9% in the third quarter of fiscal 2023. Traffic or shopping frequency rose 4.8% globally and 3.5% in the United States.
No wonder, the company’s total paid members have been rising. Its growing customer base and high renewal rates have been fueling sales. Membership fees increased 6.1% to $1,044 million in the third quarter. The company ended the quarter with 69.1 million paid household members and 124.7 million cardholders.
Image Source: Zacks Investment Research
Market Penetration
Through a calculated approach that involves identifying untapped markets and tailoring offerings to meet customer preferences, Costco has managed to deepen its roots. This retail bellwether has been steadily expanding its footprint through new club openings in the domestic and international markets. Costco also operates e-commerce sites in the United States, Canada, the U.K., Mexico, Korea, Taiwan, Japan and Australia.
As of Aug 2, 2023, Costco operates 858 warehouses, including 590 in the United States and Puerto Rico, 107 in Canada, 40 in Mexico, 32 in Japan, 29 in the United Kingdom, 18 in Korea, 15 in Australia, 14 in Taiwan, four each in China and Spain, two in France and one each in Iceland, New Zealand and Sweden.
Costco also remains committed to opening new clubs in the domestic and international markets. In our view, the company’s diversification strategy is a natural hedge against risks that may arise in specific markets. After opening 13, 20 and 23 net new warehouses in fiscal 2020, 2021 and 2022, respectively, Costco plans to open 23 net new units in fiscal 2023. We foresee an improvement in membership fees as new warehouse openings ramp up.
Wrapping Up
A favorable product mix, steady store traffic, pricing power and a strong liquidity position should help Costco continue outperforming. The strategy to sell products at discounted prices has helped Costco draw customers who have been seeking both value and convenience amid rising prices. The Zacks Consensus Estimate for Costco’s current financial-year sales and EPS suggests growth of 6.7% and 9.5%, respectively, from the year-ago reported numbers.
3 Picks You Can't Miss Out On
Here we have highlighted three better-ranked stocks, namely Grocery Outlet (GO - Free Report) , The TJX Companies (TJX - Free Report) and Celsius Holdings (CELH - Free Report) .
Grocery Outlet, the extreme value retailer of quality, name-brand consumables and fresh products, currently sports a Zacks Rank #1 (Strong Buy). The expected EPS growth rate for three to five years is 12.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Grocery Outlet’s current financial-year sales and earnings suggests growth of 10.6% and 2.9%, respectively, from the year-ago reported numbers. GO has a trailing four-quarter earnings surprise of 14.3%, on average.
The TJX Companies, the leading off-price apparel and home fashions retailer, currently carries a Zacks Rank #2 (Buy). The expected EPS growth rate for three to five years is 10.8%.
The Zacks Consensus Estimate for The TJX Companies’ current financial-year sales and earnings suggests growth of 6.5% and 15.4%, respectively, from the year-ago reported numbers. TJX has a trailing four-quarter earnings surprise of 6.6%, on average.
Celsius Holdings, which offers functional drinks and liquid supplements, currently carries a Zacks Rank #2. CELH delivered an earnings surprise of 100% in the last reported quarter.
The Zacks Consensus Estimate for Celsius Holdings’ current fiscal-year sales and earnings suggests growth of 87.6% and 168.8%, respectively, from the year-ago reported numbers.