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Category: Stock Market and Costco Wholesale
Date: 13 December 2019 Stock Price: $297.34 We take a look at the 1st quarter earnings report of their 2020 fiscal year of Costco Wholesale, one of the worlds largest retailers that operates 785 warehouses, of which 546 of them are located in the United States.
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About Costco Wholesale
Costco currently operates 783 warehouses, including 544 in the United States and Puerto Rico, 100 in Canada, 39 in Mexico, 29 in the United Kingdom, 26 in Japan, 16 in Korea, 13 in Taiwan, 11 in Australia, two in Spain, one in France, one in Iceland, and one in China. Costco also operates e-commerce web sites in the U.S., Canada, the United Kingdom, Mexico, Korea and Taiwan.
A Costco in Hanam, Korea
Overview of Costco's 1st quarter 2020 earnings report
- Total Revenue: $36.236billion (up from $34.311 billion for the same quarter of the previous year)
- Total Revenue increased by 5.6% over the last 12 months
- Operating expenses: $32.233 billion (up from $30.623 billion for the same quarter of the previous year)
- Cost of sales increased by 5.25% over the last 12 months
- Net income: $844 million (up from $767 million for the same quarter of the previous year)
- Diluted earnings per share: $1.90 (up from $1.73 per share for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 443.680 million (up from 442.749 million for the same quarter of the previous year)
- Cash and cash equivalents: $9.027 billion
- Cash and cash equivalents per share: $20.34
- Cash and cash equivalents makes up 6.8% of Costco's market capital
- Cash and cash equivalents makes up 17.6% of Costco's total assets
- Accounts receivable: $1.711 billion
- Accounts receivable makes up 3.32% of Costco's total assets
- Inventories: $13.818 billion (up from $11.395 billion for the same quarter of the previous year)
- Inventories makes up 26.9% of Costco's total assets
- Costco's inventories grew by 21.3% over the last 12 months
- Stockholders equity of Costco: $16.224 billion
- Stockholders equity per share for Costco : $36.56
- So Costco is trading at 8.1 times it stockholders equity per share which is well within the expected range of between 2 and 4 times most companies tend to trade at.
- Stockholders equity per share for Costco : $36.56
Costco Wholesale's management commentary on their 1st quarter 2020 earnings report
ISSAQUAH, Wash., Dec. 12, 2019 (GLOBE NEWSWIRE) -- Costco Wholesale Corporation (“Costco” or the “Company”) (Nasdaq: COST) today announced its operating results for the first quarter (twelve weeks) of fiscal 2020, ended November 24, 2019.
Total and comparable sales were negatively impacted by approximately one-half percent due to Thanksgiving occurring a week later this year. E-commerce sales in the quarter were negatively impacted by an estimated 12 percentage points. Net income for the quarter was $844 million, or $1.90 per diluted share, compared to $767 million, or $1.73 per diluted share, last year. This year’s first quarter reflects a $77 million ($0.17 per diluted share) tax benefit related to stock-based compensation, compared to a $59 million ($0.13 per diluted share) similar benefit last year.
Total and comparable sales were negatively impacted by approximately one-half percent due to Thanksgiving occurring a week later this year. E-commerce sales in the quarter were negatively impacted by an estimated 12 percentage points. Net income for the quarter was $844 million, or $1.90 per diluted share, compared to $767 million, or $1.73 per diluted share, last year. This year’s first quarter reflects a $77 million ($0.17 per diluted share) tax benefit related to stock-based compensation, compared to a $59 million ($0.13 per diluted share) similar benefit last year.
Costco currently operates 785 warehouses, including 546 in the United States and Puerto Rico, 100 in Canada, 39 in Mexico, 29 in the United Kingdom, 26 in Japan, 16 in Korea, 13 in Taiwan, 11 in Australia, two in Spain, and one each in Iceland, France, and China. Costco also operates e-commerce sites in the U.S., Canada, the United Kingdom, Mexico, Korea, Taiwan, and Japan.
Costco Wholesale (NASDAQ: COST) stock price history
The image below, obtained from Google, shows the stock price history of Costco Wholesale for the last 5 years. And it's been a very good time for Costco stockholders. 5 years ago the stock was trading at around $129 a stock and its currently trading at $297.34 a stock. That's a very strong return of 130.5% provided by Costco over the last 5 years.
The stock of Costco is trading at a lot closer to its 52 week high of $307.34 than it is to its 52 week low of $189.51 which to us is a clear indication that the short term sentiment and momentum of Costco stock is very positive.
The stock of Costco is trading at a lot closer to its 52 week high of $307.34 than it is to its 52 week low of $189.51 which to us is a clear indication that the short term sentiment and momentum of Costco stock is very positive.
Costco Wholesale (NASDAQ: COST) stock price over the last 5 years
Recent coverage of Costco Wholesale
The extract below shows some of the latest coverage on Costco Wholesale obtained from TheStreet.com
Costco (COST) - Get Report shares were wavering in after-hours trading after the membership-based retailer reported fiscal first-quarter earnings per share advanced 9.8%, stronger than analyst estimates. For the quarter ended Nov. 24 Costco earned $1.90 a share against $1.73 in the year-earlier quarter.
A survey of analysts by FactSet had been looking for earnings of $1.73 a share. The Issaquah, Wash., company on Dec. 4 had reported that net sales rose 5.6% to $36.24 billion from $34.31 billion.
Comparable sales companywide for the quarter rose 4.3%, or 5% excluding the impact of gasoline prices and foreign-exchange fluctuations. U.S. comparable sales rose 4.7%, or 5% reflecting the exclusions
Read the full article here
Costco (COST) - Get Report shares were wavering in after-hours trading after the membership-based retailer reported fiscal first-quarter earnings per share advanced 9.8%, stronger than analyst estimates. For the quarter ended Nov. 24 Costco earned $1.90 a share against $1.73 in the year-earlier quarter.
A survey of analysts by FactSet had been looking for earnings of $1.73 a share. The Issaquah, Wash., company on Dec. 4 had reported that net sales rose 5.6% to $36.24 billion from $34.31 billion.
Comparable sales companywide for the quarter rose 4.3%, or 5% excluding the impact of gasoline prices and foreign-exchange fluctuations. U.S. comparable sales rose 4.7%, or 5% reflecting the exclusions
Read the full article here
Costco Wholesale store front at night
Costco Wholesale (NASDAQ: COST) latest stock valuation
So what is Costco Wholesale (NASDAQ: COST) stock worth based on the release of their latest earnings report? Based on their earnings report and the guidance provided our valuation models provide a target (full value) price for Costco of $224.30 a stock. We therefore believe that the stock of Costco Wholesale is overvalued.
We usually suggest long term investors look to enter a stock at least 10% below our target (full value) price which in this case is $224.30. So a good entry point into Costco stock would be at $201.90 or below. We expect the stock of Costco Wholesale to pull back from current levels to levels closer to our target (full value) price in coming weeks and months as even at $224.30 we were fairly generous regarding the group's short and medium term prospects in our valuation models.
Since the stock of Costco is trading at well above our suggested entry point and our full value price we rate the stock of Costco as avoid.
We usually suggest long term investors look to enter a stock at least 10% below our target (full value) price which in this case is $224.30. So a good entry point into Costco stock would be at $201.90 or below. We expect the stock of Costco Wholesale to pull back from current levels to levels closer to our target (full value) price in coming weeks and months as even at $224.30 we were fairly generous regarding the group's short and medium term prospects in our valuation models.
Since the stock of Costco is trading at well above our suggested entry point and our full value price we rate the stock of Costco as avoid.
Next earnings release of Costco Wholesale
It is expected that Costco Wholesale will release their 2nd quarter 2020 earnings report in early March 2020