Costco Stock Falls Despite Earnings Beat. Here's Why
Costco's earnings report showed strong demand for gold bars and silver coins. Here's what you need to know.
Costco Wholesale (COST) stock is struggling Friday after the membership warehouse's appearance on the earnings calendar. While COST beat revenue and earnings expectations for its fiscal 2024 third quarter, the company kept membership fees unchanged at current rates.
In the 12 weeks ended May 12, Costco's revenue increased 9.1% year-over-year to $58.5 billion. Comparable store sales were up 6.5% when excluding the impacts from changes in gasoline prices and foreign exchange, while e-commerce sales surged 21% on strong demand for gold bars and silver coins.
COST also said its earnings per share (EPS) jumped 29% from the year-ago period to $3.78.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The top- and bottom-line results cruised past analysts' expectations. According to CNBC, Wall Street was anticipating revenue of $58.1 billion and earnings of $3.70 per share.
When asked on the conference call about a possible membership fee increase, Costco Chief Financial Officer Gary Millerchip said that even though the company is well beyond the typical five years for an increase, it is still evaluating "high inflation and the risk and concern around recession" to determine when the right time will be to raise fees.
Costco also eased concerns about raising the price of its $1.50 hot dogs. Although the company cut off access to non-members earlier this year, Millerchip confirmed in the earnings call that the "price is safe."
Is Costco stock a buy, sell or hold?
Overall, analysts remain generally upbeat toward the retail giant. According to S&P Global Market Intelligence, the consensus analyst target price for COST stock is $805.82, representing implied upside of about 1% to current levels. Meanwhile, the consensus recommendation is a Buy.
Financial services firm UBS is one of the most bullish firms on Costco stock with a Buy rating and a $940 price target.
"COST posted yet another quarterly result which indicated continued significant market share gains and broad-based strength across the business, with its worldwide traffic growing 6% year-over-year, discretionary business outperforming, and its operating margin reaching the highest quarterly level in nearly 24 years," UBS Global Research Michael Lasser said in a report. "We think COST will likely have even more levers to increase its dominance in the retail industry in the coming years."
The $940 price target represents implied upside of about 18% to current levels.
Related Content
-
3 Retirement Changes to Watch in 2026: Tax EditionRetirement Taxes Between the Social Security "senior bonus" phaseout and changes to Roth tax rules, your 2026 retirement plan may need an update. Here's what to know.
-
The 'Yes, And...' Rule for RetirementRetirement rarely follows the script. That’s why the best retirees learn to improvise.
-
Inheriting Wealth: 4 Mistakes That Could Cost You EverythingGen X and Millennials are expected to receive trillions of dollars in inheritance. Unless it's managed properly, the money could slip through their fingers.
-
What Not to Do After Inheriting Wealth: 4 Mistakes That Could Cost You Everything
Gen X and Millennials are expected to receive trillions of dollars in inheritance. Unless it's managed properly, the money could slip through their fingers.
-
'The Money Prism' Solves Retirement Money's Biggest Headache: Here's HowThis simple, three-zone system (Blue for bills, Green for paycheck, Red for growth) helps you organize your retirement savings by purpose and time.
-
No, AI Can't Plan Your Retirement: This (Human) Investment Adviser Explains WhyAI has infinite uses. But creating an accurate retirement strategy based on your unique goals is one place where its possibilities seem lacking.
-
A Value Focus Clips Returns for This Mairs & Power Growth FundRough years for UnitedHealth and Fiserv have weighed on returns for one of our favorite mutual funds.
-
Small-Cap Stocks Gain Momentum. That's Good News for This iShares ETFThe clouds appear to be parting for small-cap stocks, which bodes well for one of our favorite exchange-traded funds.
-
Don't Let a 60/40 Portfolio Derail Your Retirement: Why a Cookie-Cutter Approach Could Cost YouChoosing a personalized retirement investment plan, rather than relying on the 60/40 portfolio, could help protect your savings and ensure long-term growth.
-
Are You Winging Your Retirement Plan? A Wealth Adviser's Tips to Help Build Wealth and Navigate RiskIf you have no strategy tying together your accounts or haven't modeled scenarios to make sure your savings will last, then your plan is probably inefficient.
-
Divide and Conquer: Your Annual Financial Plan Made Easy, Courtesy of a Financial AdviserOverwhelmed by your financial to-do list? Split it into four quarters and assign each one goals that connect to the time of year. It could be life-changing.
