| Author | Message | ||
     Kubang Celebrity Bewarse Username: Kubang Post Number: 36566 Registered: 09-2011 Posted From: 161.141.1.1 Rating: N/A |
• Maintaining target at $188 • We believe that Costco's financial strength and ability to deliver extreme values are key differentiators for the stock in the current market environment. • While Amazon is a threat to every retailer, we continue to like Costco based on its low prices and efficient operations. There is also a lot that Costco does that Amazon doesn't do. For example in FY16, COST sold $6 billion of meat, $9.1 billion of gasoline and $6.5 billion of produce. Costco also filled 41 million prescriptions. • Costco's high level of financial strength has allowed it to pay out special dividends, including $7.00 per share paid in May 2017. • In the third quarter, the frequency of customer visits was up over 3% and U.S. traffic was up 4%. We regard this as a strong showing for Costco, given that aggregate mall traffic has declined at an annual rate of approximately 6% over the last year. INVESTMENT THESIS We are maintaining our BUY rating on Costco Wholesale Corp. (NGS: COST) and maintaining our target price of $188. We believe that Costco's financial strength and ability to deliver extreme values are key differentiators for the stock in the current market environment. Our analysis of core operations suggests that execution of the business plan remains excellent, with strong traffic and membership renewals. While Amazon is a threat to every retailer, we continue to like Costco based on its low prices and efficient operations. There is also a lot that Costco does that Amazon doesn't do. In FY16, COST sold $6 billion of meat, $9.1 billion of gasoline, $1.8 billion of wine, $1.4 billion of seafood, $1.5 billion of bakery goods and $6.5 billion of produce. Ignorance is bliss |