The Biggest Loser: Can It Be Anyone But Costco? Costco's earnings beat wasn't enough to prevent it from being the worst-performing stock in the S&P 500. By Ben Levisohn Oct. 6, 2017 5:55 p.m. ET Costco Wholesale(COST) sunk to the bottom of theS&P 500today afterbeating earningsbut but getting bedeviled by the details. ILLUSTRATION:GETTY IMAGES Shares of Costco Wholesale fell 6% to $157.09 today, while the S&P 500 dipped 0.1% to 2549.33. Cowen's Oliver Chenand team keep their Outperform rating on Costco, even if they don't sound like it in this snippet from a note today: COST remains a proven executor with superior vertical integration and an impressive buying and merchant organization. We are also excited by aggressive and agile moves to bring grocery online given the new Costco Grocery & expanded Costco White Label delivery with Instacart – we are confident that these services will drive share gains. Our cautious stance is primarily based on the difficult road ahead for balancing core merchandise margins vs. store traffic given the need to have an aggressive value proposition. Further, we expect member renewal rates to tick down another several quarters, before likely rebounding - similar to COST's experience in Canada after switching between credit card partners. Finally, we also believe investor sentiment continues to be cautious – and investors will likely continue to believe COST remains a stock that’svulnerable toAmazon(AMZN) competition despite positive and improving physical traffic – this dynamic seems likely to continue which could weigh on shares even if COST prints outstanding fundamentals. Costco Wholesale's market capitalization fell to $68.9 billion today, down from $73.3 billion yesterday. http://www.barrons.com/articles/the-biggest-loser-can-it-be-anyone-but-costco-1507326927
I think Costco will bounce back relatively quickly as the holiday season approaches. Everytime I go there the checkout lines are jam packed with customers. They got hit by the "pretty soon, everyone will only be shopping at Amazon and all other retail is going to go bankrupt" meme.
The average analyst target of 180 seems overly bullish. If anyone follows COST fundamentals, I'd like to know why you think it currently earns such a rich P/E ratio, even after the drop... Quarterly EPS and margins were down this quarter. With a net profit margin of 2%, even a small decline in revenues could result in reduced earnings expectations. This year the trailing PE for COST reached above 30. Analysts expect about 10% EPS growth next 5 years, but even with the next years estimated EPS of 7, a DCF model with 9% cost of capital returns a fair valuation of only $120. The 10 year average PE range is around 22 which at next years estimated EPS of 7 would suggest a valuation of $154 by next year. Any thoughts? Whats your 'fair value' model for COST?
"Markets are random and efficient enough that price moves but not so much that fair value is immediately apparent." - Burt Malkiel ( professor of Economics at Princeton and Vanguard Vice Chairman)
The chart is pretty random. This is a cult stock, which means the stock price would be kept artificially high even with mounting facts.
Costco might launch its own streaming service for 'average Americans' Mark Greenberg, a TV industry veteran most recently linked to Walmart, held talks with Costco about "building out a service geared toward average Americans," according to a CNBC report published Thursday. A person familiar with the matter told CNBC that no agreement had been reached. (Business Insider)
Peter Lynch wrote about this in the late '80's. He coined a term for it. Diworsification. If they have that kind of cash laying around, they need to give it back to the shareholders.... not piss it away on something they have zero expertise in. Stupid.
Costco has unionized employees. Unions destroy companies. Costco will be destroyed. #RepublicanMantraDictatesCostcoWillGoToZero