Costco Wholesale Corporation (NASDAQ:COST) is the country’s largest membership-only warehouse and one of the biggest retailers in the world.
Its stock is up by 6.96% year-to-date. But has lost approximately 6% form its highs of $182.45 over the last 5 days, amid April earnings, according to which the company’s net income dropped by 6% to $515 million. However, total revenue in the period increased by 6% to reach $29.77 billion. Earnings per share came in at $1.17 per share, less than the consensus estimate of $1.36 per share. Costco Wholesale Corporation (NASDAQ:COST) membership grew by 5%, and comparable sales were up 3%. After the April report, Stifel reiterated a Buy rating on Costco Wholesale Corporation (NASDAQ:COST) stock and set a price target of $185. Stifel’s analyst Mark Astrachan thinks that Costco Wholesale Corporation (NASDAQ:COST) continues to “meaningfully outperform” broader retail trends, driven by its superior value proposition.
Baird’s analyst Peter Benedict thinks that Costco Wholesale Corporation (NASDAQ:COST) 3% increase in comparable sales actually translates to 4.5% – 5.0% increase if we take into account the Easter calendar shift. The analyst thinks that the future prospects of top-line growth of Costco Wholesale Corporation (NASDAQ:COST) are strong as deflation is expected to moderate in the future, and problems in the tobacco business are also expected to subside. Last year, Costco started drastically decreasing tobacco products at its stores amid declining demand. Baird has a $200 price target on Costco stock with an “Outperform” rating.
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Costco Wholesale Corporation (NASDAQ:COST) competes with its competitors like Walmart, Sam’s Club and BJ’s Wholesale by offering products at lowest possible prices, and basing its business model on memberships. The company earns a substantial chunk of its revenue from its membership fee ($55), which have an 87% renewal rate worldwide.
Last month, Costco Wholesale Corporation (NASDAQ:COST) increased its dividend by 11.1%. The company announced $0.50 per share dividend, or $2 annualized dividend, up from the prior dividend of $0.45. After the dividend increase, Deutsche Bank reiterated its ‘Buy’ rating on the stock and gave a price target of $187.
Last month, Barclays analyst Karen Short increased Costco Wholesale (NASDAQ: COST) to ‘Overweight’ from ‘Equal Weight’ and also bumped up the stock’s price target to $185 from $175.
Unlike major retail companies which are getting hammered due to Amazon’s rising influence and changing market trends, Costco Wholesale Corporation (NASDAQ:COST) is well positioned and seems to be safe from this trend. Barclays recently said in a report that Costco is “well protected” from Amazon. Food remains the top strength of Costco, as 80% of the shoppers surveyed by Barclays said they prefer to visit Costco Wholesale Corporation (NASDAQ:COST) physical stores to buy food items.