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Time to Buy Costco (COST) Stock As Sales Surge & E-Commerce Shines?

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Shares of Costco (COST - Free Report) surged to a new high Friday morning after it released August and fiscal year sales figures that highlighted the retail powerhouse’s growing e-commerce business. So let’s take a look at what investors should make of Costco stock as it thrives amid increased competition from Walmart (WMT - Free Report) , Target (TGT - Free Report) , and Amazon (AMZN - Free Report) .

Recent Results

Costco’s August net sales jumped 12.2% from $9.8 billion in the year-ago period to hit $11.0 billion. Meanwhile, the company posted net sales of $43.4 billion in its 16-week fiscal fourth-quarter, which marked a 5% jump.

Investors should also note that Costco released its full fiscal year net sales figures as well. The big-box giant saw its net sales surge 9.7% from $126.2 billion in the 53-week fiscal year 2017 to reach $138.4 billion in its 52-week fiscal 2018.

More specifically, Costco’s U.S. sales jumped 10.8% in the fourth quarter and 9.4% for the year. Plus, the company’s e-commerce sales surged 26.2% for the quarter and 32.2% in fiscal 2018. It is worth noting that these growth figures include impacts from changes in gasoline prices and inflation, which had a positive impact on U.S., Canadian and international sales.

Overview

Still, Costco’s e-commerce strength was impressive once again. The company saw its e-commerce sales jump 36.8% during its fiscal third quarter. Costco has been able to lift its e-commerce sales through a series of initiatives. This includes the launch of CostcoGrocery last fall, which offers two-day delivery for non-perishable food and household supplies to customers nationwide.

Costco also expanded its same-day delivery service to “most metropolitan” areas through an updated partnership with Instacart. Costco’s successful jump into e-commerce will help it better compete with rivals Target and Walmart, which both posted impressive quarterly results recently.

In fact, Walmart’s second-quarter U.S. comparable store sales popped 4.5% and its e-commerce sales soared by 40%. Walmart noted that it posted its highest domestic same-store sales growth in more than 10 years.

Outlook

Costco’s continued e-commerce expansion looks poised to help the company become more profitable. Our current Zacks Consensus Estimate is calling for the firm’s adjusted fiscal fourth-quarter earnings to jump by 11.06% to hit $2.31 per share. Costco’s fiscal year earnings are projected to surge by over 20%.     

The company has also earned six positive earnings estimate revisions for both Q4 and it current fiscal year over the last 60 days, against zero downward changes. COST is currently a Zacks Rank #3 (Hold) and sports an “A” grade for Growth in our Style Scores system.  

Shares of COST popped over 2.3% in mid-morning trading to rest near their new 52-week and all-time high of $242.12 per share. Therefore, it might not be the best time to buy Costco stock at the moment, but it is certainly worth keeping an eye on for a better buying opportunity.

Costco is set to report its official Q4 and full-year financial results in early October.

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