Financial Trading Blog

Stock of the day 04/03/2015 – Costco Wholesale Corp



With Costco facing increasing competition from Target and Sam’s Club (a subsidiary of Walmart), the bargain wholesaler needs to maintain its estimate-beating when it announces its Q2 2015 earnings release on Thursday.


Despite a strong Q1 earnings release in December, Costco fell nearly 2% to $140.26 in the aftermath as investors were unimpressed with its figures. This then led to a recent low of $137.37 in mid-December as it suffered in the market wide slump as Christmas approached. Come the New Year, and Costco had crept up, opening 2015 at $141.60; the stock then saw declines over January after the announcement of some disappointing sales figures. However, the surprise announcement of a ‘special’ $5 per share dividend led to a 3 day rally, seeing Costco grow around 9% to $155.96. Since then the stock has fallen off slightly, steadily trading around $147 for the past fortnight.

Costco Chart March 2015

Costco’s biggest news since December came on Monday, as it announced a co-branding deal with Citigroup which sees the world’s largest consumer credit card issuer become the exclusive provider of Costco credit cards. On top of this, the company is replacing American Express with Visa as the store’s credit card network. This news was a significant boost to both Citigroup and Visa, with the former being upgraded to an ‘overweight’ rating at JP Morgan, whilst the latter reached all-time highs on the back of the news. This announcement should feature heavily in forward projections for the company, with Costco eager to play up the consumer benefits of the move.

In terms of its figures, Costco has been impressive in the last 2 quarters, beating analyst expectations both times. Its December Q1 2015 announcement saw $1.12 in earnings per share, a big increase on the previous year’s $0.96, alongside a total revenue rise of 7.4% as sales by the same amount. Despite international sales dragging down strong US figures in December and January, leading to 3% growth in the former and a flat performance in the latter, forecasts are still positive for Q2. Costco’s earnings per share are expected to be $1.18, with 5.4% growth in revenue to $27.74 billion.

MARKET ANALYSIS

RECENT POSTS

DISCLAIMER


Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 64% of retail investors lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money. For professional clients, spread betting and CFD trading can also result in losses larger than your initial stake or deposit.

Spreadex Ltd is authorised and regulated by the Financial Conduct Authority, provides an execution only service and does not provide advice in any way. Nothing within this update should be deemed to constitute the provision of investment advice, recommendations, any other professional advice in any way, or a record of our trading prices. This update does not constitute or form part of an offer of, or solicitation for a transaction in any financial instrument, nor shall it or the fact of its distribution form the basis of, or be relied on in connection with, any contract therefore. Any persons placing trades based on their interpretation of the comments or information within this update does so entirely at their own risk.

No representation, warranty, or undertaking, express or limited, is given as to the accuracy or completeness of the information or opinions contained within this update by Spreadex Ltd or any of its employees and no liability is accepted by such persons for the accuracy or completeness of any such information or opinions. As such, no reliance may be placed for any purpose on the information and opinions contained within this update. 

The information contained within this update is the intellectual property of Spreadex Ltd and is protected by UK and International copyright laws. All rights reserved. Users may however freely download, distribute and reproduce extracts of the contents, subject always to accrediting Spreadex Ltd as the source and providing a hyperlink to www.machibet77.com.