Consumer Discretionary

By Sabrina Escobar Costco Wholesale stock was on track for its second straight day of losses Monday following backlash from a lackluster fiscal second-quarter earnings report. Take advantage of the dip, some analysts said, but be wary of the stock’s valuation. Shares of Costco were falling 1.6% to $713.83 on Monday after closing around 7% lower Friday in the stock’s worst trading day in nearly two years. The past two trading days essentially have erased the stock’s nearly 9% gain over the past month. At the heart of the pullback was Costco’s slight revenue miss for the holiday quarter, which ended in mid-February. As Barrons’ Andrew Bary noted this weekend, a quarterly sales increase of 6% was hardly enough to justify the stock’s lofty valuation. Before Thursday’s earnings report, Costco traded at a record 48 times forward earnings. On Monday, Costco’s price-to-earnings ratio had ticked down to 43.6 — but […]

Telsey Advisory Group analyst Joseph Feldman maintains Costco Wholesale (NASDAQ:COST) with a Outperform and raises the price target from $785 to $800.

Costco Wholesale (COST) shares dropped 4.6% in premarket activity Friday after the company’s fiscal Q2 results showed the increase in net sales lagged market expectations. The company reported fiscal Q2 earnings late Thursday of $3.92 per diluted share, up from $3.30 a year earlier. Analysts polled by Capital IQ expected $3.61. Net sales for the quarter were $58.44 billion, up from $55.27 billion a year earlier. Analysts surveyed by Capital IQ expected $59.13 billion.

CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows: We keep our 12-month target at $770, 44.5x our FY 25 (Aug.) EPS of $17.32 (cut from $17.45; FY 24 up to $16.04 from $15.93) vs. 37x five-year average forward P/E. F2Q EPS of $3.92 (+19% Y/Y) beat by $0.31, although there were a few below-the-line benefits related to the $6.7B special cash dividend (e.g., favorable tax rate; elevated interest income due to a higher cash balance). Comp sales (ex-fuel/FX) grew 5.8% Y/Y, a sequential acceleration from F1Q (+3.9%). Membership income grew 8% Y/Y. COST is seeing strength in some bigger-ticket discretionary categories (e.g., appliances, tires), a stark contrast to most other retailers, as COST is lowering prices on merchandise where commodity or freight costs have come down. Digital sales were up a solid 16%, with Costco

By Andrew Bary It’s getting to be a silly season for certain stocks. The technology stocks propelling the S&P 500 have raced ahead while leaving much of the rest of the market behind. Valuations on the priciest tech stocks based on profits and sales are approaching the peak values reached in late 2021, before the big Nasdaq selloff in 2022. Companies such as Cadence Design Systems, Cloudflare, and Nvidia trade for nearly 20 times projected 2024 sales, a calculation based on market value divided by estimated revenue. Even Microsoft, the world’s largest company at $3 trillion, is valued at more than 10 times estimated sales in its current fiscal year ending in June. Once upon a time, 10 times sales was viewed as pricey. As Scott McNealy, the former CEO of Sun Microsystems, said 20 years ago, “At 10 times revenue, to give you a 10-year payback, I have to