Costco Wholesale Corp (COST)

[T695]

Nice day here today

[JohnCM]

There will be an opportunity here.

[Hana3]

Where is the bottom sp , and start go up .

[123boom]

Macd just crossed over, North bound.

[123boom]

I don't think it will go to the mid 140. The Macd is about to cross over indicating bullish move up. But we will see who is right it is the stock market.

[JWard99]

Below $151 indicates going to mid-$140's. BTW Buffett sold his Costco stock a long time ago. You will see his disclosure soon!

[jones99]

Got long Costco. Sell at 200 or higher. This one is likely be acquired by WMT IMO rather than bidding for WFM

[Hana3]

What is future with Amazon , slaves one person's wealthy no place to go shop . Everything closed. Deserted city .. haha .

[123boom]

I live in Seattle area. They do and they are a job crusher. If they stay on pace the gov. Will step in and do something. Than the Amazon party will cool off. But I predict they will become the biggest co in the US before that happens. But if you have gone to Castco recently good luck finding a parking spot. A great American co. No reason to take a hit.

[Hana3]

Amazon is poison to society, people working st amazon like slaves. Lol

[123boom]

It's funny to me that this sp has declined. Costco 7% growth in net sales for June. I would like to see Amazon try to go head to head with Costco in Costco space.

[chriswolff]

Weekly 160 calls. Let's make it a 500% run this week! Need 165 and hopeful

[JWard99]

COST is not in the same market as AMZN & WFM. Get over your theories and assumptions. Come next ER people will shut up.

[chriswolff]

No crystal ball but I wouldn't be surprised to see this back to high Territory in short time , complete nonsense move.

[AugustStockInformer]

Merger with Alibaba?

Interview with Richard Galanti the CFO:
https://www.twst.com/interview-evp-cfo-director-costco-wholesale-corporation-nasdaqcost/

TWST: In 2014, Costco opened an online store in China via Alibaba. How is that going? What are future plans to evolve Costco to meet the rise of online commerce?

Mr. Galanti: First of all, our online e-commerce business worldwide is a little under $4 billion. In the past several years, it’s grown in the mid- to high-teens year over year. It is still small as a percentage of our company, less than 4% of our $100 billion-plus business. In terms of Alibaba Tmall, we are offering approximately 160 items on the Tmall site. Many of them are private-label Kirkland Signature items, and it’s been a success thus far.

[ITMS]

Costco Plunges Lower, Know This Trade Level

Today, leading wholesale warehouse retailer Costco Wholesale Corp (NASDAQ:COST) is declining by $4.06 to $163.03 a share. The retail giant's stock price has been coming under pressure since early May when the shares traded as high as $183.18. Currently, COST stock is sitting right on its 200-day moving average so there is some near term daily chart support.

Unfortunately, the better and stronger institutional support level for COST stock price will be around the $157.00 area. This is a spot on the chart that has a gap window from December 8th, 2016. Often, this level will be defended when retested. This level presents a very solid risk/reward long (buy) side opportunity in the stock.



Nicholas Santiago
InTheMoneyStocks

[treehouse1]

I'm buying all the way back up!!

[shub]

Down 5% today on news of Amazon's buying Whole Foods.

[JohnCM]

RSI(14) 69.46

The froth is off the top.

[JohnCM]

Would not be surprised to see a retrace back to $165

I'll stop out before then ...

[shub]

Good post Msmithgold...Thank you.

[JohnCM]

It is overextended. I will buy, but in smaller chunks.

[JohnCM]

I had a limit order to buy this morning. How did it not fill on a RED day?

Oh well, market order next.

[MrBankRoll]

In addition to raising the company's quarterly dividend by five cents to $0.50 cents a share, the wholesaler announced a special cash dividend of $7 per share to shareholders of record by the market close on May 10.

https://www.aol.com/article/finance/2017/04/26/costco-is-giving-shareholders-a-special-payment-cost/22056983/

[treehouse1]

I am so happy to own shares in one of the best companies in the world.

[Bullish3892]

Visa partnership

[msmithgold]

Case Study of Costco Valuations and Right Entry Point

Summary of case study and good read on common valuation pitfalls

Costco (COST) Case Study:
Over the past two decades, COST generated a cumulative return of 1790% vs 337% in the S&P – probably safe to say that COST was not overvalued over this period
Costco membership costs about $45/yr and in exchange, people shop at Costco because goods are priced at a fixed 14% markup over cost
Costco’s operating costs are extremely low and this makes it difficult for even WalMart to compete as they can’t make money pricing goods as low as Costco
In order to make money selling at 14% above cost, revenues need to be very high
Competitive advantage is derived from what management does with this revenue advantage – passes efficiency gains back to consumer to drive more growth
Consumers benefit from firm’s expansion which drives supplier prices down
Over the past two decades, traded on average at 24x forward earnings estimates (stock looked always expensive)
We estimate steady state value for COST around $74/share which is nearly half of COST’s recent stock price – but this is conservative due to a number of factors temporarily depressing current profitability
COST stores are immature – newer stores only generating $80-100MM in sales vs $160MM on average and $180MM for stores open for 10+ years
Assuming new stores eventually ramp up to average, newer stores are under-earning by $8.7B
If you consider likelihood for a near-term hike in membership fees and maturation of existing store base, normalized steady state value increases to $80/share (60% of today’s value)
Costco is profitable enough to self-fund growth and has done so throughout history; so growth has been more measured in pace and more sustainable as COST is not dependent on capital markets
5-year average ROIC stood around 13% vs. long-term average of 12%; despite the recent increase, believe normalized returns are greater than indicated by reported financials – assuming maturation of existing stores, estimated normalized ROIC of 16%
Assuming 16% returns, company’s earnings multiple should fall somewhere in the range of 15.7x to 25.5x depending on one’s expectation for earnings growth (4% to 10%)
Management appears comfortable with current pace of square footage growth – assuming 4-5% annual growth, equates to 1050 to 1150 stores in ten years
For perspective, HD and LOW have 4,000 combined stores in the US alone
In summary, future value for COST might be in the area of $40-80 per share – adding steady-state value of $80-90/share, puts fair value in the range of $120 to $170
Bottom line, would be happy to own COST at a 25% discount to our estimate of intrinsic value or roughly $100/share
At an entry point of $100/share, assuming mid-single digit comps and store growth, would expect to generate ~20% annual returns

Full case study and read on common pitfalls of valuation: https://investoralmanac.com/2017/03/02/multiples-vs-valuation-growth-vs-returns-cheap-vs-value-drivers-of-value-creation-costco-case-study/

[shub]

If you look back at the record, you'll see COST is generally overvalued across time.
The reason is it's superior management, employee loyalty, steady pricing, the divi,and the fact that business thrives in harder times.
That's more than worth the 18%, especially with our unstable and unpredictable government presently.

[Drmicrocap]

IN the NEWS: COST beats by .06

[ValueInvestor15]

COST valuation models imply stock's 18% overvalued prior to earnings

Fair Value Analysis

[Drmicrocap]

In The News: COST

[royallen]

Citigroup, the world’s biggest credit-card lender, ranked second-to-last out of 10 companies in a J.D. Power credit-card customer satisfaction ranking last year. AmEx slid to second place behind Discover Financial Services after holding the top spot in the first eight years of the survey.

[Sam Bremner]

Costco is a great company with great management, I'm a big supporter of the Costco here in Vancouver and think longer term this company will continue to do very very well.

Sam Bremner
IVEST Consumer
Vancouver, Canada

[jones99]

Costco (COST) reported second quarter earnings per share and revenues that missed estimates. Comparable store sales, excluding the impact of gasoline price inflation and foreign exchange, in the U.S. rose 4 percent in February.

[$tock~$crooge!!]

Down we go! No amount of hope will help today!
$COST

[T_money_]

Agreed! This stock is a beast!

[kaisdaboss88]

Costco will hit at least 167 by eoy

[treehouse1]

Bought in at 140.00. - adding this little gem to my vast portfolio. I am looking at a huge winner.

[Mrxstocks]

I found a hair clip in my Costco bread how do I sue Costco?

[conix]

The Costco Effect: 5 Ways It Stands Out From the Competition

The warehouse retailer is breaking the mold of big-box stores. Here's what makes it so special.





For both consumers and investors, it's hard to ignore Costco Wholesale (NASDAQ:COST). The membership-based warehouse retailer has become the second-largest retailer in the country, growing to over $100 billion in sales in just over 30 years.


Source: Wikipedia.com.

Over that time, it has come to dominate the warehouse retail segment, the clear leader over rivals such as Wal-Mart's Sam's Club and BJ's Wholesale Club. Costco is the rare company that is admired by all major stakeholder groups. Employees make more than $20/hour on average, keeping turnover among the lowest in the industry; customers love its unbeatable prices; and investors rave over its market-beating returns as the stock has more than tripled since the recession.

We asked a panel of Motley Fool consumer goods writers for five ways Costco separates itself from the competition. Here's what they had to say.

Tim Beyers (Services): Costco may be known for bulk goods, but its services are nearly as valuable. Take ink refills, for example. If you have an inkjet printer, you know exactly how expensive it can be to burn through color cartridges. Refilling at Costco is a more attractive option.

Now think about the economics of offering this service if you're Costco. Sure, you need ink and some specialized equipment. Otherwise, there's no inventory, which is great for margins.

What's more, stores can use the equipment to save on its own printing costs and service those who may be buying new printers or cartridges off the shelf at the store. Everyone wins.

Ink refills are just one of a number of services Costco offers to members. From health and life insurance to discounted travel booking to boat and RV loans, Costco connects members with a number of ways to save, and then collects fees for the effort.

How much Costco collects isn't entirely clear, though when you group them all together -- including not only e-commerce and travel, but also gas, food courts, optical, pharmacy, and other services -- it's meaningful enough that executives address it as a distinct business in each quarterly call. In fiscal Q3 (ended in May), "ancillary and other business" gross margins were up 23 and 15 basis points, respectively, S&P Capital IQ reports Chief Financial Officer Richard Galanti saying at the time.

The message? No matter what you think of these one-offs, customers use them, and Costco profits from them. For an investor, it doesn't get much better than that.

Tim Green (Not advertising): Costco runs an extremely efficient operation, which is necessary for its high-volume, low-margin business model. But one of the keys to Costco's success, and its profitability, is that the company spends next to nothing on advertising. Other than sending out direct mail to prospective members, and sending coupons to existing members, Costco does no traditional marketing at all.

Costco can get away with this for one simple reason: Its memberships sell themselves. The value proposition is obvious after one trip to a Costco warehouse, and the customer service is generally superior to that of other large retailers. Costco has had no problem growing its membership, and with renewal rates above 90% in the United States, it's had no problem retaining members, either.

How much does Costco save by shunning traditional advertising? Wal-Mart, which has always been a stingy advertiser, spends about 0.5% of its revenue on marketing each year. If Costco spent that same percentage of its revenue on advertising, its operating profit would be about 17.5% less. If Costco spent the same amount on advertising as Target does, about 2.2% of revenue, the company's operating profit would be slashed by 75%.

While other retailers need to advertise in order to get customers in the door, Costco doesn't have that problem. With most of its profits coming from membership fees, and with members renewing their memberships nine times out of 10, Costco has one of the most loyal customer bases in all of retail. Word of mouth is the cheapest form of advertising, and by providing its customers with the lowest prices available, Costco has no shortage of that.

Dan Caplinger (Membership): One huge way Costco stands out from nearly every other retailer in the industry is in how it aims to earn its profit. Retail tends to be a low-margin business, and retailers consistently compete on price while still trying to squeeze out enough profit to remain financially viable. Costco's membership model gives it a huge advantage, and the profitability of that gives the company more flexibility in setting prices where they will be most beneficial to its customers and its bottom line.

Specifically, membership revenue is almost pure profit, and it typically makes up nearly all of the net income Costco brings in. As a result, Costco can price its merchandise in a way that allows sales proceeds to just barely cover merchandise costs and the warehouse retailer's overhead expenses. Other retailers, by contrast, have to set prices higher because they don't have that cushion of membership revenue to support their profitability.

The membership model also gives customers the same incentives that Costco has to maximize sales. Once you pay your annual membership fee, taking advantage of savings opportunities becomes a vital part of the value proposition of your membership, leading to increased spending. With such high renewal rates, Costco clearly has its finger on the pulse of its shoppers and knows it's giving them what they want.

Demitrios Kalogeropoulos (Inventory management): Costco churns through its inventory more than 12 times each year. That lightning-quick turnover rate means it gets paid for what it sells before the bill to its suppliers comes due. That effectively shifts the responsibility of financing inventory over to Costco's vendors, helping make this one of the most efficient retailers in the world.

Rapid sales volumes are made possible by an intense focus on offering only the fastest-selling models, sizes, and colors for any particular product. Yes, Costco carries a wide selection of merchandise categories -- everything from electronics to tires to fresh food. But within those categories, a shopper's options are limited: The typical warehouse is stocked with less than 4,000 products, compared to 45,000 at a Kroger (NYSE:KR) grocery store, or 80,000 items at Target (NYSE:TGT).

But customers have been eager to take the trade-off of fewer overall choices in exchange for lower prices. In fact, Costco's shopper traffic has grown at an above-market 4% rate for six years running. The increased traffic is feeding a virtuous cycle of faster inventory turnover, translating into lower costs, lower prices, and still more traffic.

Jeremy Bowman (Customer experience): For many of the reasons mentioned above, customers love Costco. First and foremost may be the low prices it offers, but there are also several other reasons the retailer ranks among the leaders in its industry for customer satisfaction.

Costco offers a range of products unlike almost any other business, including eyewear, wine, pharmacy, apparel, and electronics, allowing customers to maximize their memberships, and consumers overwhelmingly approve of the quality of the merchandise. They also love the little things about Costco, like the $1.50 hot dog and soda deal (it sold over 100 million hot dogs last year) and the free samples peppered around the store.

Because Costco rotates products often, consumers have the chance to find a new deal or new item they like nearly every time they come into the store, making it a more exciting experience than most shopping trips. Its no-hassle return policy is also popular since Costco even offers cash refunds.


Throw in the thrill and comfort of getting a good deal, and it's easy to see why Costco has retention rates of around 90%.

[Trueheart]

And, Costco has five bucks waiting in wings for every share I own.

Hee-hee.

Trueheart

[JustLooking162636]

$Cost 4hr Chart Update

GoodLuck 2 All :)

https://twitter.com/JL162636/status/568868047269838848/photo/1 <----Photo

https://www.tradingview.com/v/fFCeTCCn/ <----Out Come

[Trueheart]

TAC, the restroom was sanitary and clean and I was truly impressed...as always.

Tie a string around your finger 'cause next time you're in the area, the snacks are on me.

Could be we'll chance upon a lobster bisque. Hee-hee.

Trueheart

[sonetirot]

You should try buying appliances via Costco online then compare with Sears. Service are much better. 2 Years warranty (directly from Manufactures) compare 1 years at Sears. Free delivery, installation and haul away. I no longer shop at Sears anymore. Shop at Costco 2-3 times a weeks for most of the stuff. No more big Groceries at Safeway, Giants, Target except certain small items st super market. I believe I spent about $1000 at Costco every month about $100 at other super market from Amex Card. Receive about $740 rebate from Amex up to date this year + 2% (do not know exact until I got it) more from Costco shopping. What a deal.

[Trueheart]

I just got back from Costco.

Snacked on a yummy macaroni and cheese delight and roast beef in a delicious gravy. Didn't get dessert so I had the hot dog with all the fixin's.

I would have treated.

Maybe next time.

Trueheart

[Truthaboutcompanies]

If anyone bought over $156! Stop TRADING IMMEDIATELY

That was the most overvalued stock I have seen.

Run up 15 points in a few days.

HAHAHA

[Truthaboutcompanies]

TOS reported what? COSTCO DOWN BIG! RED! RED!

It is a simple analysis when a company reports a $5 dividend and the price jumps $16 dollars...

The market cap 8 Billion! HAHA

Options were exercised because the dividend through them off.

And insider selling as disclosed publically already!

They would rather take the big dollars, then the petty dividend!

And just continues to fall after hours!

[sonetirot]

TOS REPORTED

[Trueheart]

Well, TAC, I have to hit the road now. Going to Costco.

Can I pick up something for you? Maybe a delish pizza.

Hey, I just may skip the dog and get a three-topping pie.

Yum.

Trueheart

[Truthaboutcompanies]

Yep at about any other place NO MEMBERSHIP FEE!

Why is Costco giving back so Much in Dividends??

BECAUSE THEY are PAYING BACK YOUR OWN MONEY.

BUT THE VAST MAJORITY OF IT TO THEMSELVES!

Costco = Terrible Business Model

Costco = Ha I wouldn't trust those books for second!

Who is in charge at Costco.... BECAUSE IT wasn't Sinegal and it is not what's his name

Craig Jelynek... who cares if it's spelled right. he has n real power anyway!