Costco Wholesale Corporation (COST)

Shares are down 7% after a mixed quarter after a slight miss on the top and a beat on the bottom; some softness in discretionary spending which is a little concerning. The street was expecting better from membership numbers. They have runway ahead and remain the best big-box retailer.

EPS of $3.92 beat estimates of $3.62; revenue of $58.44B missed estimates by 1%. Costco's same-store sales growth remains solid as consumers continue to appreciate value. In-store traffic is the main driver, outpacing gains in average transaction size, a trend likely to persist in fiscal 3Q. Strength in food and sundries is a bright spot, though discretionary spending on some big-ticket items is slowly improving. This is helping drive e-commerce revenue gains, which skew to higher-priced items. Improvements to the mobile app and better advertising campaigns are also aiding digital-sales growth. Inflation is moderating in some categories, letting the company lower prices and reinforce its value proposition, helping to drive robust membership-renewal rates. Merchandise gross margin may slightly expand in 3Q on lower supply-chain related costs. The stock dropped on concern on lower margins, and lack of near-term catalysts, but a planned membership price hike (being considered) may change this. But nothing in the release gives us any real concern, though the stock does remain premium priced. 
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Retail advantage: low prices due to its club membership model. They report tomorrow. Also, they have such scale, they can collect massive data and harness that data using AI to better predict their business.

Excellent business, but valuation of stock price is high. Amazing management of business with own processes that keep prices low for customers. Is excellent for long term holders to buy (5+ years). Membership fee allows company to weather ups and downs of retail. 

New managers in early March will focus on raising digital sales, which are only 7% of overall now. COST is a permanent compounder.

Loves it. Loves their subscription model. Likes today's price increase by Wall Street. Generates tons of cash and can withstand a consumer slowdown. He own Walmart for similar reasons.

Sometimes the best time to plant an oak tree is today. If you're trying to find the best time to buy, buy half now, and the rest on a downdraft. Well run, usually delivers. Short-term suggestion that it can come back into its range.

Not a fan of retail, except for this one. The best, well run. 

Recent pullback good time to buy. Excellent business overall. Highly valued, but a good long term investment. Could be better opportunities in Dollar General for capital appreciation. 

A leader. Dominant position in US. Buy on any day "that ends in 'y'". Always seems expensive if you look at the high 30s PE ratio. Chart looks stretched. Look for a pullback, perhaps when December seasonality subsides early in the new year. Membership rate increases every couple of years creates earnings power, as there are few good substitutes.

About as good as it gets on long-term buy and hold.

Very strong business in North America. Offshore business units not as strong. Inflation will attract new consumers. Execution of business very good. 40x P/E ratio very high. Would wait to buy on weakness. 

Up 44% this year, 4.5% today. Nobody does it better than them in retail. Last night they reported an amazing quarter: 7% increase in cardholders, member fee income up 8.2%, enjoying lower freight costs and will pay a special one-time dividend to shareholders. Plus, they're controlling shoplifting. One to own forever.

They report Thursday. He wants to hear what they say about the impact of inflation on consumer demand. This has had a good run this year. Don't trade it in and out. Doesn't have a problem with theft, like other retailers.

Both. Buy them 50/50. Costco is about their memberships, and TJX is the best off-price retailer around.