Costco Valuation and Performance - Costco's stock has surged over 600% in the past decade, driven by new store openings, same-store sales growth, and e-commerce expansion [1] - The stock is considered overvalued with a P/E ratio of 56, double that of the S&P 500 index [1] - Billionaire investors, including Ray Dalio's Bridgewater Associates and Ken Griffin's Citadel Capital, have been selling Costco shares in Q2, indicating concerns over stretched valuation [1][2] Home Depot Analysis - Home Depot is the largest home improvement retailer in the US, but its stock has struggled due to the housing market slowdown and remains below its 2021 peak [3] - The Federal Reserve's rate-cutting cycle, including a 50 basis point reduction, is expected to boost the housing market and home improvement projects, benefiting Home Depot [3] - Home Depot's acquisition of SRS Distribution expands its addressable market by $50 billion and strengthens its vertical integration [4][5] - The stock trades at a P/E ratio of 27, with earnings growth expected to rebound as the housing market recovers [5] Target Analysis - Target has faced challenges from slowing consumer spending and internal issues like theft, but recent improvements in gross margin (27% to 28.9%) and operating margin (4.8% to 6.4%) indicate a positive turnaround [6] - Falling interest rates and controlled inflation are expected to encourage consumer spending, further supporting Target's recovery [6] - Target continues to open new stores and leverages competitive advantages such as its multicategory business model, store-based fulfillment, and curbside pickup program [7] - With a P/E ratio of 16 and expected earnings growth comparable to Costco, Target is seen as a more attractive investment compared to Costco [7]

Costco's Quarterly Performance - Costco's shares declined following a mixed quarterly report, with a slight revenue miss but a strong bottom-line beat [1] - Quarterly earnings increased by +6.1% on +1% higher revenues, with comparable same-store sales up +5.3% in the US and +5.5% in Canada [1] - Discretionary categories like jewelry, furniture, and tires saw double-digit gains, while digital comps surged +19.5% [1] Costco's Valuation and Market Performance - Costco's stock pullback is attributed to its premium valuation after a +34.7% year-to-date gain, outperforming the Zacks Retail sector (+20.3%) and the S&P 500 (+20.5%) [2] - The stock trades at 50.8X forward 12-month EPS estimates, significantly higher than its 5-year median of 35.9X [2] Q3 Earnings Season Overview - Costco's fiscal Q4 results are included in the Q3 earnings season tally, alongside companies like FedEx and Oracle [3] - 14 S&P 500 members have reported Q3 results, with earnings up +26.8% year-over-year on +3.4% higher revenues [3] - 71.4% of companies beat EPS estimates, and 78.6% beat revenue estimates [3] S&P 500 Earnings Trends - S&P 500 Q3 earnings are expected to grow +3.34% year-over-year on +4.5% higher revenues, following +10% earnings growth in the previous quarter [7] - Earnings estimates for Q3 2024 have been revised down more significantly than in recent periods, with 14 out of 16 Zacks sectors seeing downward revisions [8] - Despite negative revisions, aggregate earnings for Q3 are expected to reach a new all-time quarterly record [9] Tech Sector and Magnificent 7 Performance - The Tech sector is expected to see Q3 earnings growth of +11.6% on +10.7% higher revenues [12] - The Magnificent 7 (Mag 7) companies are expected to contribute +17.2% earnings growth and +13.6% revenue growth in Q3, accounting for 21.4% of all S&P 500 earnings [10][11] - Excluding the Mag 7, S&P 500 earnings would be flat year-over-year [11] Long-Term Earnings Outlook - S&P 500 earnings are expected to grow +7.7% in 2024, improving to +9.6% excluding the Energy sector [10] - Double-digit earnings growth is projected for 2025 and 2026, with the Tech sector maintaining robust growth momentum [9][13]

Costco Wholesale Corporation (COST) posted its fourth-quarter fiscal 2024 results, with earnings surpassing the Zacks Consensus Estimate but revenues falling short of the same. Both the metrics showed year-over-year growth. Comparable sales also increased, though the pace of growth moderated compared to the preceding quarter. This can be attributed to the cautious consumer spending environment and lower gasoline prices.Costco’s Quarterly Performance: Key Metrics and InsightsCostco reported adjusted earnings ...

An apparent tailwind hit yesterday's value stocks, a new development seen in the declining shares of Costco Wholesale Co. NASDAQ: COST after the company released its latest set of quarterly earnings this week. Costco stock is now down over 2% after the report, a bearish sentiment that comes despite the Federal Reserve (the Fed) recently cutting interest rates by the most since the 2008 financial crisis.However, some investors argue these rate cuts might have been priced into stocks like Costco and Walmart I ...

Costco is already reaping the benefits after recently introducing membership card scanners at the front of warehouses in its U.S. stores, and the move is being well-received by customers, the wholesale club said Friday. During the retailer's fourth quarter earnings call, Costco CEO Ron Vachris noted that the company has used card readers at the front of its stores in Europe for more than two years now and has been piloting the system in the U.S. for roughly six months. Ticker Security Last Change Change % C ...

The retail giant's quarterly results came up a bit short on the top line.Shares of Costco Wholesale (COST -1.99%) were heading lower Friday after its fiscal fourth-quarter revenue came in slightly below estimates.Ahead of Thursday afternoon's report, the warehouse retailer was trading at a lofty valuation, so a pullback on its slight miss wasn't a surprise.As of 10:51 a.m. ET Friday, the stock was down 1.5% after having fallen by as much as 3% earlier in the session. Costco is solid, but it trades at a pre ...

We last wrote about Costco Wholesale (NASDAQ: COST ) (NEOE: COST:CA ) in April of 2024 with a sell rating . It is not that we dislike the company, we even had a buy rating in late 2022 when the forecast PE wasWe use Cash Flow Returns On Investment based DCF valuation tools provided by our affiliate company, ROCGA Research.With over 20 years of experience in investment analysis, we are actively seeking out undervalued and quality companies.ROCGA Research is an online platform that provides an objective and s ...

Costco shares are down slightly in premarket trading after disappointing same store sales numbers. ... [+] (Photo by Joe Raedle/Getty Images)Getty ImagesKey Takeaways S&P 500 Hits Its 42nd High, Signaling Broad Market Strength With 80% Stocks Above Moving Averages China's Stimulus Boosts Stocks, But Concerns Linger About Long-Term Effectiveness Of Government Intervention PCE Data Suggests Controlled Inflation, Possibly Giving The Fed Room For Future Interest Rate CutsStocks closed higher on Thursday as the ...

Costco (NASDAQ: COST ) shares keep moving up, now targeting $1,000. Whether or not Costco reaches $1,000 by the end of the year doesn't bother me. This is because I know it eventually will and because I have very little reason to believe II focus on long term growth and dividend growth investing. I follow both the US and the European stock markets, looking for undervalued stock and/or for high quality dividend growing companies that provide me with cash to reinvest. Over time, I have come to realize that pr ...

Analyst’s Disclosure: I/we have a beneficial long position in the shares of COST either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any i ...