Opinions
Gordon Reid
Costco Wholesale Corporation
COST-Q
DON'T BUY
Mar 18, 2025
Stock price when the opinion was issued
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Profitability is improving; expanding due to e-commerce growth, Kirkland signature, and ad revenue. Reputable brand. Opens 25-30 stores a year. Adding footprint in China. Likes the stability and steady growth. Performs well even in uncertain markets. Impressive membership renewal rate over 90%, and that recurring revenue is a major strength. Sales are still growing from both price and traffic increases. Yield is 0.51%.
(Analysts’ price target is $1067.36)Profitability is improving; expanding due to e-commerce growth, Kirkland signature, and ad revenue. Reputable brand. Opens 25-30 stores a year. Adding footprint in China. Likes the stability and steady growth. Performs well even in uncertain markets. Impressive membership renewal rate over 90%, and that recurring revenue is a major strength. Sales are still growing from both price and traffic increases. Yield is 0.51%.
Its stability can weather volatility long term. Expecting 9% EPS growth in both 2025 and 2026. Fundamental score is 9/10.
Managed to combine recurring revenue (membership fees) with traditional retail. Business model is still the best in the retail space. Big push toward lower-cost merchandisers. Second to none in its ability to not only survive, but thrive, in what could be a difficult economic environment. Yield is 0.48%.
(Analysts’ price target is $1063.88)
A great company based on a fantastic model with nearly all profits covered by membership fees, but trades in the mid-40x PE, which is too high for a retailer, even after this pullback. Great company, but not a great stock.