$COST otherwise known as Costco stock has been beaten down of late and its time for a breakdown on the company.
Current Price: $296.56
52/Wk High: $325.26
52/Wk Low: $261.67
Read below for the breakdown!
Costco is an excellent company with a great membership and volume business model. The company has also expanded into markets like China, where the people are loving it.
When last reported Costco announced a huge 91% renewal rate among US shoppers and a whopping 55.8 million members globally. The renewal rate represented a Q3 increase in renewals of .1% but these rates are already stellar.
Just from its Q3 membership fees, Costco brought in $815 million against the last year same time of $776 million.
On the other hand, comps only increased 8% when last reported versus competitors higher comps growth.
While memberships came in positive the company delivered a Q3 earnings disappointment with a $1.89 EPS versus the expected $1.95 EPS. Costco also delivered slightly lower revenue for Q3 at $37.3 billion.
On the other hand, Costco is massive, and with customers renewing and growing, as well as COVID-19 encouraging the high volume grocery buying, the outlook seems to be mostly positive.
Analysts are also very positive on $COST with an average price target of $324.82/share representing 9.53% upside. Secondly, the high price target is $350.00/share and low is only $297/share so analysts are not very separated on the outlook.
The big money is very bullish as well with 70.24% of Costco stock being institutionally owned. The largest holders of the name are Vanguard Group, Blackrock inc., and State Street Corporation.
In all, COVID should create a great short term catalyst for Costco due to high grocery volume. While earnings disappointed in Q3 I expect them to bounce back and hopefully deliver a Q4 beat.
While I do not currently hold $COST it is on my watchlist and I like it under $300/share. I expect the stock can run to $350/share by year-end if positive catalysts come to fruition.
Disclaimer: This is not direct financial advice, simply opinion based on independent research.