Costco Wholesale (COST) beat Wall Street forecasts with its latest earnings.
The Seattle-based retailer and warehouse club reported earnings per share (EPS) of $5.29, which topped consensus analyst estimates of $5.08, according to data from FactSet. Revenue in this year’s second quarter totaled $79.7 billion, which matched estimates. Same-store sales rose 5.4% from a year earlier, which was a little below forecasts that called for a 5.7% increase.
COST stock dipped 1% in after hours trading on news of its latest financial results, likely because sales failed to exceed expectations. Additionally, Costco’s e-commerce sales, a key growth engine for the company, rose 19.5% in the latest quarter, which fell short of the 19.63% growth that was forecast. Revenues generated from membership fees increased $1.51 billion in the quarter, which also failed to meet estimates of $1.54 billion.
Costco is Raising its Membership Fees
While its latest financial results didn’t blow past Wall Street’s expectations, Costco has several catalysts on the horizon that could give its share price a boost in coming months. The company continues to expand beyond its core grocery segment to sell apparel and other non-food items such as gold bars, which have proven popular with consumers and management hopes will drive future revenue.
Also, Costco just raised its annual membership fees for the first time in seven years. The fee increase went into effect on September 1, with individuals now paying $65 a year to be a member of the warehouse club, up from $60 previously. A top tier executive membership now costs $130, up from from $120. Membership fees generated more than $1 billion for Costco in its latest quarter. COST stock has risen 37% so far in 2024.
Is Cost Stock a Buy?
Costco stock currently has a Moderate Buy rating among 22 Wall Street analysts. This rating is based on 15 Buy and seven Hold recommendations issued in the last three months. There are no Sell ratings on the stock. The average price target on COST stock of $931.15 implies 3.30% upside potential from current levels.
