Costco Wholesale Corporation (NASDAQ: COST) stock soared to a record high of $269.69 on Monday as market analysts believe its new stores could yield better productivity. Also, they believe the warehouse retailer’s subscription model to be less risky than other retail chains.
Investors expect the company to outperform in the e-commerce operations in the future with five websites in the US, Canada, Mexico, UK, Korea, and Taiwan. Also, the company’s warehouses operations remained strong and opening of warehouses in new markets are expected to strengthen its growth in the future.
The company’s paid membership growth rate could be positively impacted by warehouse openings that occur in new markets as compared to existing markets. The membership format remained an integral part of its business and has a significant effect on its profitability.
The competition with rivals remained fruitful for Costco, which has taken the cup of victory during the past two quarters. Major general merchandise retail competitors included Walmart (NYSE: WMT), Target (NYSE: TGT), Kroger (NYSE: KR), and Amazon.com (NASDAQ: AMZN). Also, Costco competes with warehouse club operations primarily Walmart’s Sam’s Club and BJ’s Wholesale Club (NYSE: BJ).
In the recently completed third-quarter, Costco has a total debt of $6.5 billion with $1.7 billion remained the current portion and the long term debt stood at $4.8 billion. In contrast, the company has sufficient cash and short-term investments in the hand of $8.16 billion.
It is expected that the liabilities don’t pose much threat given the company’s immense market cap of $118.48 billion. The total debt-to-equity ratio is at 0.44 and this means the company is not aggressive in financing its growth with debt. But, Costco could borrow cheaply and has a relatively stable income.
Also read: PriceSmart Q3 earnings preview
The shareholders of Costco could rejoice about the company paying dividends at regular intervals with a payout ratio of 29%. It has a forward annual dividend yield of 0.98%. The last dividend date was May 24, 2019, and Costco is expected to unveil a dividend during the fourth quarter earnings announcement.
Shares of Costco ended Monday’s regular session up 0.43% at $269.40 on the Nasdaq. The stock has risen over 28% in the past year and over 9% in the past three months. The 50-day moving average stood at $256.37 while the 200-day moving average remained at $233.31.
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