Costco (COST) Wholesale’s stock rose on Friday after the company released strong December sales figures. The bulk discount retailer reported a 7% increase in sales for the five weeks ending on January 5, totaling $23.8 billion. This is a significant improvement from the 5.3% growth seen in November and higher than the predicted 3.5% increase. Comparable U.S. sales rose 3.6%, the largest increase since June. However, the average ticket size only grew by 1%, due in part to a drop in gas prices.
According to D.A. Davidson analyst Michael Baker, these figures support the theory that holiday sales were delayed this year, starting slow in November but picking up in December. Baker also notes that these results are positive for not only Costco, but for the near-term retail outlook in general. Costco’s shares rose 7% in early trading, bringing the stock’s six-month decline to around 2.2%.
Last month, Costco released lower-than-expected earnings for its fiscal first quarter, with diluted earnings of $3.10 per share and group sales of $54.44 billion. Membership revenues were up 5.7% to $1 billion, but still fell short of predictions. These results were influenced by a decrease in discretionary sales in the final weeks of autumn.
Analysts Predict Bright Future for Costco Stock
According to the average forecast of 22 analysts, Costco Wholesale Corp’s stock is expected to reach a target price of USD 551.61 in the next 12 months. The company has received a “Strong Buy” rating from analysts, and Stock Target Advisor’s own analysis of Costco’s stock is “Bullish,” based on 13 positive signals and 5 negative signals. The stock closed at USD 450.19, and has seen a change of -1.39% over the past week, -7.87% over the past month, and -18.14% over the last year. It looks like the future is bright for Costco investors!
