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Alberto Abaterusso
Alberto Abaterusso
Articles (1342) 

Costco Posts 11.7% Growth in Net Sales

Net sales were $13.55 billion in June

July 12, 2018 | About:

Costco Wholesale Corp. (NASDAQ:COST) has announced a 11.7% growth in net sales to $13.55 billion from $12.13 billion a year ago.

Comparable sales grew 10.8% in the U.S., 6% in Canada and 7.3% in the international market. The company's total comparable sales went up 9.7% in June. Sales from e-commerce increased 27.9%.

Excluding the impact of gasoline prices and currency swings, same-store sales in June grew 7.7% in the U.S., 3.4% in Canada and 6.9% outside of North America.

The company's total comparable sales grew 6.9% and e-commerce sales went up 27.7%.

On Wednesday, Costco Wholesale Corp. closed at $210.95 a share, down 0.35% from the previous trading day. The stock climbed 37% for the 52-week period through July 11 and outperformed the S&P 500 index by 24%. The stock in Costco is trading above the 200, 100 and 50-SMA lines:

The stock is reporting a 52-week range of $150 to $221.7 per share.

Costco is a loyal dividend payer and has been distributing free cash flow for almost 15 years. The company is distributing at quarterly dividend of 57 cents. If held constant, the distribution leads to a forward annual dividend of $2.28 per share, granting 1.08%.

GuruFocus indicates a forward dividend yield of 2.22% for the industry. In addition, Costco has a price-sales ratio of 0.67 times versus an industry median of 0.48 times.

Not only is Costoco one of the most attractive stocks in the industry in terms of dividend yield and price-sales ratio, the stock also appears to be overvalued based on the Peter Lynch chart. In fact, the current share price is above the Peter Lynch Earnings Line (P/E = 15) of $102.5 per share and the Price at Med P/E without NRI (P/E = 24.77) of $169.2 per share.

Also, an earnings yield of 3.2% is lower than the industry, which is standing at a median 5.3%.

With its secure stream of dividends and over $7 billion in cash on hand and securities for the sustainment of future payments, Costco Wholesale Corp. is undoubtedly a good stock for dividend income investors. However, I would hold the stock and wait for a significant retreatt to the level of the 100-SMA line before increasing the holding.

(Disclosure: I have no positions in Costco Wholesale Corporation.)

About the author:

Alberto Abaterusso
If somebody asks what being a value investor means, Alberto Abaterusso would answer, “The value investor is not just the possessor of the security that represents the company, but he is the owner of that company. As an owner of the company the value investor is actively involved in the dynamics of that company and his first concern is how to have sales progressively growing. Also, the value investor is probably one of the most demanding persons in the world concerning sales.”

Abaterusso is a freelance writer based in The Netherlands. He primarily writes about gold, silver and precious metals mining stocks. His articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. Alberto holds an MBA from Università degli Studi di Bari (Italy), Aldo Moro.

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