Amazon.com Inc. (NASDAQ: AMZN) has tightened its grip on e-commerce over the past few years, and even now retailers are feeling the squeeze. The likes of Wal-Mart Stores Inc. (NYSE: WMT) and Best Buy Co. Inc. (NYSE: BBY) have suffered more than most, losing market share to this e-commerce giant. However, there has been one standout that hasn’t caved to Amazon yet, and its stock is in fact hitting new all-time highs.
Costco Wholesale Corp. (NASDAQ: COST) has been an industry leader for some time, helping to pioneer a low-cost wholesale or bulk-buying model for everyday consumer goods. At the base level, it appears that this business model is working the best against Amazon’s fierce competition.
The company reported its January sales numbers recently as well. Costco saw its comps rise 7%, posting a gain across the board. In terms of the breakdown, U.S. comps rose 6%, Canada comps rose 11% and Other international sales rose 4%. The firm intends to report its next upcoming earnings in the first week of March.
With Costco shares hitting a new high in Monday’s trading session, a few analysts took this opportunity to weigh in on this wholesale giant. 24/7 collected some of the key highlights from these reports and included them below.
Macquarie was one of the first analysts out of the gate with a Neutral rating. The firm actually commented at the very beginning of February:
Costco January comparable-store sales posted strong results, crushing consensus estimates. Headline and core comps accelerated to 7% and 5%, respectively, as traffic growth strengthened to just over 4%, and are a welcome departure from the consistently sluggish U.S. core comps over the previous seven months but are not so quick to think this is the new run rate. Clear and known catalyst remain (windfall from the new Citi Visa credit card arrangement, potential membership fee increase) and are more than adequately reflected in the current valuation (well above 5- and 10-year averages).
Cowen has an Outperform rating. The firm went on to call Costco an attractive defensive stock that continues to show great execution.
Wells Fargo has just a Market Perform rating, but it commented early in February:
Improvement across most categories, deflation less of a headwind. January strength was led by sequential improvement in hardlines and food categories. Food and sundries were up low-single digits, as deli and food improvement offset tobacco declines of -19% y/y. Hardlines sales were up +high-single digits (vs. +MSD in Dec.) while softlines category sales were +mid-single digits. Despite continued deflation, fresh foods were up mid-single digits led by stronger volumes in meat, produce and deli categories. Deflation remains across the business but was less of an overall headwind, primarily impacting food and electronics categories, while nuts, proteins and oils returned to inflation. … Costco called out the Northeast, Midwest, and Texas as its stronger U.S. regions.
Shares of Costco were trading at $171.84 on Monday, with a consensus analyst price target of $175.46 and a 52-week trading range of $138.57 to $172.49.
Amazon shares were trading at $841.19. The 52-week range is $511.66 to $847.21, and the consensus price target is $926.38.
Shares of Wal-Mart were last seen at $67.89, in a 52-week range of $62.35 to $75.19. The consensus analyst target is $74.04.
Best Buy was trading at $44.26, with a consensus price target of $45.45 and a 52-week range of $28.02 to $49.40.
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