Costco Wholesale Corp.

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SKU: COST Category:

Description

Costco delivered a disappointing set of results as the company was unable to meet the revenue expectations as well as the earnings expectations of Wall Street. Net sales for the quarter grew 1.9% to $52.6 billion, compared to $51.61 billion at the same time last year. Shipping and freight markets have improved substantially. Traffic or shopping frequency increased by 4.8% globally and 3.5% in the United States during the quarter. Their average daily transaction or ticket was down 4.2% globally and 3.5% in the United States, owing primarily to weakness in higher-priced non-food discretionary products. Costco’s worldwide renewal rate was 90.5%, while the U.S. and Canada renewal rate was 92.6%. Membership continues to increase. The company had 124.7 million cardholders at the end of the third quarter. They also had 31.3 million paid executive members. The gross margin for ancillary and other businesses increased by 13, then increased by 9 after adjusting for petrol deflation. Gasoline, business centers, food courts, and travel performed better than they did a year ago in the supplementary companies, which was partially offset by e-commerce. The company’s management expects strong momentum in the upcoming quarter. We give Costco Wholesale Corporation an ‘Underperform’ rating with a revised target price.

Our Report Structure:

⦁ Company Overview
⦁ Investment Thesis
⦁ Key Drivers
⦁ Historical Quarterly Statement Analysis – Income Statement & Cash Flows
⦁ Historical Quarterly Balance Sheet Analysis
⦁ Historical Annual Financial Statement Analysis
⦁ Analysis Of Key Financial Ratios
⦁ Financial Forecasts For 3 Years
⦁ Forecasting The Capital Structure & Net Debt
⦁ Discounted Cash Flow Valuation
⦁ Trading Multiples
⦁ Key Risks
⦁ Disclosures

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