Costco Wholesale Corp

NASDAQ:COSTUnited States

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• Costco June Sales "Overshadowed" by Membership Fee Increase, UBS Says, from 4 hours ago by MT Newswires

  4 hours ago by MT Newswires
  Companies Mentioned: COST
  04:22 PM EDT, 07/11/2024 (MT Newswires) -- Costco Wholesale's (COST) positive June sales might be "overshadowed" by the fee increase in its stock movement, UBS said in a note Thursday. However, the brokerage believes the fee increase actually suppor...

• DJ Costco Is Maintained at Equal-Weight by Wells Fargo, from 5 hours ago by Dow Jones

  5 hours ago by Dow Jones
  Companies Mentioned: COST
  
  Ratings actions from Benzinga: https://www.benzinga.com/quote/COST/analyst-ratings
  
  (END) Dow Jones Newswires
  
  July 11, 2024 15:16 ET (19:16 GMT)
  

• DJ Sell Some Costco Stock But Not All. Here's Why. -- Barrons.com, from 6 hours ago by Dow Jones

  6 hours ago by Dow Jones
  Companies Mentioned: WMT, AMZN, COST
  Teresa Rivas Costco Wholesale has been nearly unstoppable in recent years. It might not be a bad idea to reap some profits from the retailer's huge run. Costco has long been a Barron's favorite, and with good reason. The stock's outperformance has come with consistently strong sales growth, loyal membership, and an increased global footprint. None of that has changed, as shoppers are still flocking to its stores: At a time when inflation is still biting, cheap eats and bulk value are resonating with many consumers. That much is obvious from the fact that the stock is rising on Thursday, following its first membership increase since 2017. The long-awaited increase is a relatively modest one, as the new cost will be $65 a year for individuals and $130 for executive memberships, up from $60 and $120, respectively. The new tiers apply to about 52 million members in the U.S. and Canada, about evenly split between the individual and executive memberships, and given that Costco has extremely high retention rates, it's reasonable to assume that nearly all will accept the higher fees. That equates to roughly $350 million to $400 million revenue tailwind for the company -- but one that will take time to play out, given members won't have to pay the new higher fee until renewal, a time frame that in some cases could be some two years out. This is undeniably good news, as Costco will see an increase in a valuable, stable revenue sources that will allow it to reinvest in its business. Because of this plan to allocate the increased funds, the company doesn't forecast an increase in earnings per share due to the move, but analysts aren't feeling as cautious. Jefferies' Corey Tarlowe sees the possibility of an approximately 3% benefit to earnings per share over each of the next two years, leading him to raise his price target on Costco stock to $1050 from $860, and reiterate a Buy rating. Similarly, Baird analyst Peter Benedict raised his fiscal 2025 earnings-per-share estimate to $17.25 from $17.10, and introduced a $19.10 fiscal 2026 estimate, "both of which reflect partial flow-through of the fee increase." His price target is now $975, up from $850, and he maintains an Outperform rating. Realistically, at least a small earnings-per-share increase is quite likely, especially toward the latter of the two-year renewal window: At that point capital expenditures will likely already be in place, and all members will be paying the higher fees. The news also came with another strong month of same-store sales in June, with both total and U.S. core June comp growth of 6.9% and 6.3%, respectively, while consensus estimates called for 6.6% and 5.8%. Little wonder then that Telsey Advisory Group analyst Joseph Feldman writes that "Costco is executing exceptionally well in this uncertain operating environment. We expect the company to remain a share gainer, with its solid sales and high membership renewal rates." We agree, but also think it can't hurt to take at least some profits after Costco's magnificent run, rather than adding on today's stock pop. That's for three main reasons. The first is valuation. The shares have always commanded a premium, and for good reason, but at more than 50 times forward earnings, it's in new, eye-watering territory. That compares with a five-year average of just 36.6 times. Guggenheim's John Heinbockel admits he sounds like "a broken record," but after the stock's market-beating year-to-date run of more than 30%, the shares are now the most expensive in large-cap retail on a 2025 earnings before interest, taxes, depreciation, and amortization basis. Similarly, while catalysts remain for Costco, investors have reason to believe they could get the shares cheaper than they are now, thanks to the membership bump. As Baird's Benedict notes, "At risk of being too literal, we note the shares have tended to perform well in the initial three months following past fee-increase announcements, then lag for a few months before resuming better performance." Then there's the fact that while Costco has been a powerhouse in recent years, it's not the same company nor the same environment that dominated during the pandemic and immediate aftermath. Both its longtime chief executive and chief financial officers have departed, and things like Amazon.com's Amazon Prime and even Walmart's Walmart+ are proving to be more-formidable rivals than they were roughly seven years ago, when the last membership fee hike was implemented. That's not to say that the current Costco isn't up to competing in the new normal, or that a significant number of members will choose one of these alternatives. Certainly betting against the stock hasn't been fruitful, and that's not likely to change. Yet if investors want to celebrate by cashing out some of their profits for a shopping spree of their own, it's not a bad idea. And they'll go pretty far in Costco's food court. Write to Teresa Rivas at teresa.rivas@barrons.com This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal. (END) Dow Jones Newswires July 11, 2024 15:01 ET (19:01 GMT)

• Costco Wholesale Membership Fee Raise Supports Earnings Visibility, BofA Says, from 7 hours ago by MT Newswires

  7 hours ago by MT Newswires
  Companies Mentioned: COST
  01:51 PM EDT, 07/11/2024 (MT Newswires) -- Costco Wholesale's (COST) membership fee hike supports earnings visibility into the next two fiscal years, BofA Securities said. Late Wednesday, the warehouse operator said it will raise annual membership f...

• Top Midday Decliners, from 7 hours ago by MT Newswires

  7 hours ago by MT Newswires
  Companies Mentioned: DAL, COST, SLRX
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