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Costco Stock Rose after Reporting Strong Sales in June

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On Wednesday, Costco Wholesale (NASDAQ:COST) reported its net sales for June. For the five weeks ended on July 5, the company reported net sales of $16.18 billion, which represents a growth of 11.1% from $14.57 billion in June last year. The strong comparable sales growth of 11.5% drove the company’s sales. 

Costco reported a strong performance across all of its segments. In the US, the company reported comparable sales growth of 11.0%, while Canada and others reported 8.4% and 18.0%, respectively. During the same period, the company’s e-commerce sales grew by 85.8%. 

Meanwhile, Costco’s performance looked even stronger if we remove the impact of gasoline price changes and foreign exchange. Excluding these, the company’s comparable sales growth came in at 14.4%. Meanwhile, the US segment reported comparable sales growth of 13.6%, while Canada and others reported comparable sales growth of 12.2% and 22.1%, respectively. The company’s e-commerce sales were 86.7% higher excluding gasoline price changes and foreign exchange.

Costco’s sales growth

For the 44 weeks that ended on July 4, Costco reported revenues of $136.37 billion. The amount is an increase of 8.1% from $126.13 billion during the same period last year. Meanwhile, the company’s comparable sales growth was 6.7%. Individually, the US reported comparable sales growth of 7.2%, while Canada and others reported comparable sales growth of 3.6% and 7.6%, respectively. The company’s e-commerce sales rose by 42.6% YoY (year-over-year).

Excluding the impact of gasoline price changes and foreign exchange, Costco reported a comparable sales growth of 8.1% for the 44 weeks. Individually, the company reported a comparable sales growth of 8.1% in the US, 6.0% in Canada, and 10.2% in other markets. Costco’s e-commerce sales increased by 43.4% YoY.

Stock performance and analysts’ recommendations

Costco’s announcement on Wednesday increased investors’ confidence. The company was trading 1.5% higher in the after-hours of trading. Meanwhile, the company has returned 7.6% this year as of Wednesday. The spike in the sales amid COVID-19 led to a rise in the company’s stock price. Meanwhile, for the recently completed quarter, the company reported a mixed performance. Costco beat analysts’ revenue expectations but reported a lower-than-expected EPS.

So far this year, Costco has outperformed its peers and the broader equity markets. Walmart (NYSE:WMT), Walgreens Boots Alliance (NASDAQ:WBA), and Target (NYSE:TGT) have returned 4.7%, -28.3%, and -8.2%, respectively. The S&P 500 Index has declined by 1.9% YTD.

Overall, Wall Street is bullish on Costco. Among the 31 analysts, 58.1% recommend a “buy,” 38.7% recommend a “hold,” and 3.2% recommend a “sell.” As of Wednesday, analysts’ consensus target price was $324.79, which represents a 12-month return potential of 2.7%. 

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