Is Costco Stock Still a Buy After Earnings?
Costco stock is slightly higher Friday after the warehouse club beat expectations for its fiscal first quarter. Here's what Wall Street has to say.
Costco Wholesale (COST) stock is trading slightly higher Friday after the warehouse club beat top- and bottom-line expectations for its fiscal 2025 first quarter thanks in part to impressive online sales.
In the 12 weeks ending November 24, Costco's revenue increased 7.5% year over year to $62.2 billion, driven by a 5.2% rise in same-store sales. Its earnings per share were up 12.8% from the year-ago period to $4.04.
The report also showed that e-commerce sales jumped 13% year over year, helped by the Costco app being downloaded 2.9 million times during the quarter. This brought the total number of downloads to approximately 42 million.
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"E-commerce traffic, conversion rates, and average order value were all up year over year, helping to drive another strong quarter of comparable sales growth," said Costco Chief Financial Officer Gary Millerchip on the company's conference call.
The executive also noted that Costco "ended Q1 with 77.4 million paid household members, up 7.6% versus last year, and 138.8 million cardholders, up 7.2% year over year."
Millerchip added that the end of the quarter, COST "had 36.4 million paid Executive Memberships, up 9.2% versus last year. And Executive Members now represent 46.8% of paid members and 73.1% of worldwide sales."
Costco's top- and bottom-line results beat analysts' expectations. Wall Street was anticipating revenue of $62.1 billion and earnings of $3.79 per share, according to CNBC.
Is Costco stock a buy, sell or hold?
Costco Wholesale shares have had an impressive run in 2024, up nearly 51% on a total return basis (price change plus dividends) for the year to date. And Wall Street is bullish on the retail stock.
According to S&P Global Market Intelligence, the average analyst target price for the consumer staples stock is $1,003.89, representing a slight premium to current levels. Meanwhile, the consensus recommendation is a Buy.
Financial services firm Jefferies is one of the more bullish outfits on COST stock with a Buy rating and a $1,145 price target.
"COST continues to report favorable results, with a bottom-line beat even excluding the $100 million tax benefit," says Jefferies analyst Corey Tarlowe. "Traffic led the enterprise core comp growth, operating margin expanded, and digital discretionary trends were robust. Looking ahead, we remain encouraged by COST's business model to report consistent top- and bottom-line growth ahead."
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