Should You Buy Costco Stock After Recent Earnings?

TL;DR

Costco's stock is down 15% year-to-date following a Q1 earnings report that disappointed on revenue and earnings. Membership fees surpassed $1 billion, significantly contributing to profits, while U.S. stores performed well despite challenges in international markets. Analysts see Costco's consistent growth and predictable business model as reasons to consider adding to your investment, particularly if the price drops below $450.

Transcript

Costco stock is down 15 percent a year to date that is after reporting q1 earnings after the Bell today we will get into those earnings we'll take a look at the Rev of the new estimates for the upcoming quarters as well look at this from the valuation perspective and then you gotta look at this from a technical perspective since for basically 40 ye... Read More

Key Insights

• 🧑‍🤝‍🧑 Costco's stock is down 15% year to date, but has held up relatively well compared to other investments.
• 😘 The company's business model, focused on predictable membership fees and low-margin merchandise sales, contributes to consistent earnings growth.
• 🥳 Costco's valuation is relatively high, with a price-to-earnings ratio of over 36.
• 🛀 The company's technical chart shows a consistent trading pattern over the last 40 years.
• 🇨🇷 Costco's operating expenses, including merchandising costs and administrative costs, remain low.
• 🌍 U.S. stores are performing better than international markets, with Canada experiencing a 2.4% increase in sales.
• 👨‍💼 Costco's e-commerce business has not been a priority for the company and experienced a decline in sales.

Questions & Answers

Q: How did Costco's Q1 earnings perform compared to expectations?

Costco's Q1 earnings missed expectations, with revenue growth at 8.1% year over year and earnings coming in below estimates.

Q: What contributed to Costco's high-margin revenue?

Costco's membership fees crossed the $1 billion mark, contributing to high-margin revenue for the company.

Q: How are Costco's U.S. stores performing compared to international markets?

Costco's U.S. stores are performing well, with a 9.3% increase in sales. However, there is weakness in international markets, including Canada, Mexico, and the United Kingdom.

Q: Is Costco's e-commerce business performing well?

Costco's e-commerce business slipped year over year, experiencing a decline of about 3.7%. The company has not placed much emphasis on e-commerce compared to competitors.

Summary & Key Takeaways

• Costco's Q1 earnings missed expectations on both revenue and earnings, with revenue growth at 8.1% year over year.

• Membership fees crossed the $1 billion mark, contributing to high-margin revenue for the company.

• The company's U.S. stores are performing well, but there is weakness in international markets and a decline in e-commerce business.