Costco Wholesale (COST) beat expectations for the company’s Q1 earnings late Thursday and the retailer’s board declared a special dividend. Costco stock inched up after the results and after pulling back from record highs during the regular session.
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Costco reported a 16.6% increase in earnings to $3.58 per share on 6.2% revenue growth to $57.8 billion in revenue. FactSet analysts expected 11% earnings growth to $3.41 per share on $57.79 billion in revenue.
Net sales rose 6.2% to $56.72 billion while membership fee revenue jumped 8.2% to $1.08 billion. The retailer’s adjusted comparable sales, which exclude impacts from gas prices and foreign exchange, rose 3.9% companywide. E-commerce comparable sales increased 6.1%. U.S. comparable sales rose 2.6%, trailing the 8.2% increase in Canada and the 7.1% gain internationally.
Costco’s board of directors also declared a special cash dividend of $15 per share to investors holding COST stock as of Dec. 28, 2023. The dividend will be paid on Jan. 12 with a total payment amount around $6.7 billion.
Costco reported double-digit earnings growth the past three quarters while revenue growth ranged from low- to upper-single digits over that period.
Price Target Lifted For Costco Stock
Ahead of Thursday’s earnings report, analysts had lifted their price targets on COST stock based on recent solid performance and expectations of a membership fee hike.
Costco has been a “juggernaut” the past month, which sets a high bar for the quarterly report, Evercore ISI analyst Greg Melich wrote in a Tuesday research note. Evercore ISI raised its price target on Costco stock by $10 to $650 and maintained an outperform rating on shares going into 2024 with a membership price increase on the horizon.
Increasing the price of Costco memberships is “a question of when, not if,” CFO Richard Galanti said in the retailer’s Q3 earnings call. The company last increased its membership fees in June 2017. “You’ll see it happen at some point. We can’t really tell you if it’s in our plans or not.”
Elsewhere, Telsey Advisory on Nov. 30 noted Costco continues to execute well in an uncertain operating environment and the company reported solid performance in November that was better than most retailers. Telsey sees further market share gains for Costco driven by strong sales and high membership renewal rates. Costco should continue generating EPS growth in 2024, Telsey wrote. The firm hoisted its price target on COST stock to $625 from $600 and kept an outperform rating on the shares.
Costco Stock
Costco stock rose slightly late Thursday after easing 1.8% during regular trade. Shares rallied about 10% following a Sept. 28 breakout from a flat base. COST stock is extended above a buy zone for the pattern and surpassed its prior all-time high of 612.27 from April 7, 2022.
Costco stock has spiked roughly 38% so far this year.
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Jessica Roberts is a seasoned business writer who deciphers the intricacies of the corporate world. With a focus on finance and entrepreneurship, she provides readers with valuable insights into market trends, startup innovations, and economic developments.
