Stock Peaks
The company’s commitment to returning value to shareholders is the main factor that makes it a preferred investment option for income investors, compared to most other retail stocks. After the recent rally, the stock is likely to level off in the coming weeks but it has the potential to continue the upswing in the foreseeable future.
Q2 Report on Tap
The Issaquah-headquartered company will be publishing second-quarter 2024 results on Thursday, March 7, at 4:15 p.m. ET. On average, analysts forecast earnings of $3.62 per share for Q2, compared to $3.3 per share in the same period of the previous fiscal year. The consensus revenue estimate is $59.16 billion.
Last year, customer traffic at Costco stores increased faster than the industry average, as the low prices continued to attract budget-conscious customers who are always on the lookout for better deals. The membership-only business model has been successful, with new signups and renewals growing steadily. The company will be adding around 30 new stores to its extensive network in the domestic market this year, due to the high demand.
Costco’s CFO Richard Galanti said at the Q1 earnings call, “For Q2 fiscal ’24, we plan four new locations, including our sixth building in China early in the calendar year. Regarding capital expenditures, the first-quarter capital expenditure spend was approximately 1.04 billion. We estimate that fiscal ’24 capex will be in the $4.4 billion to $4.6 billion range. That’s up from 4.3 billion we had in fiscal ’23, reflecting a continued increase in the number of the expansion that we’re doing.”
Strong Q1
In the first quarter, both earnings and revenue exceeded analysts’ estimates, marking the second beat in a row. Comparable store sales growth accelerated for the second consecutive quarter, with sales growing across all geographical segments and the e-commerce channel. First-quarter revenue moved up 6% annually to $57.8 billion, which translated into a 17% jump in profit to $1.59 billion or $3.58 per share.
In the past three years, the value of Costco’s shares more than doubled, and they stayed above the 12-month average in recent months. The stock traded slightly higher on Thursday afternoon.