On Thursday, Truist Securities maintained its Hold rating on Costco Wholesale (NASDAQ:COST) shares, accompanied by a steadfast price target of $935.00. According to InvestingPro analysis, the stock appears overvalued at current levels, trading at a P/E ratio of 54.27.
The retail giant reported a significant uptick in December sales, with US comparable sales (comps) excluding fuel and foreign exchange (FX) impacts rising by 9.8%, a notable increase from the 4.3% recorded in November. Total (EPA:TTEF) comps, also adjusted for fuel and FX, similarly demonstrated a strong performance, showing a 9.9% rise compared to the 4.9% seen in the previous month.
A calendar shift positively influenced the figures by approximately 1.5%. The food and sundries, as well as fresh foods categories, continued to exhibit solid mid-single to high-single digit growth rates, while non-food items experienced high-teen growth percentages. With total revenue reaching $258.81 billion and maintaining a healthy revenue growth rate of 5.35%, Costco's sales trends have remained robust, with the company achieving some of the strongest and most consistent stacked growth within the analyst's coverage area.
Despite these impressive sales figures, the analyst expressed caution, noting that the current valuation of Costco's stock may be overstretched. The company's strong performance in December was highlighted by a net sales total of $27.52 billion, a 9.9% year-over-year increase from the $25.03 billion reported in the same month the previous year. US comps saw a 9.3% rise, with the exclusion of fuel and FX impacts leading to a 9.8% increase, which marks an acceleration in both two-year and three-year stack growth rates.
This trend was mirrored in the total comps data, which rose by 7.4% and 9.9% on an adjusted basis, indicating a consistent pattern of growth across the board. For deeper insights into Costco's valuation metrics and growth potential, InvestingPro subscribers can access comprehensive analysis including 15+ additional ProTips and detailed financial health scores.
In other recent news, Costco Wholesale has been making significant strides in its financial performance. The retail giant reported a 9.9% increase in total comparable sales for December, surpassing consensus expectations. This strong performance also extends into the first eighteen weeks of its fiscal year, with an 8.0% increase in net sales.
Various financial firms have responded positively to these developments. Stifel analysts maintained their Buy rating on Costco, citing the company's strong December sales performance. Similarly, TD Cowen reaffirmed its Buy rating, highlighting the company's robust consumer appeal, especially in the United States. Baird also maintained an Outperform rating on Costco, following the company's earnings that slightly exceeded expectations.
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