Costco price target raised to $975 on strong revenue growth By Investing.com

On Tuesday, Tigress Financial Partners maintained a Buy rating on Costco Wholesale (NASDAQ:) and raised the 12-month price target to $975 from the previous target, citing robust revenue momentum and multiple growth catalysts. The retail giant continues to benefit from its compelling value proposition and unique shopping experience, which have contributed to significant increases in various financial metrics.

Costco reported a 9.1% year-over-year increase in Q3 2024 revenue, reaching a record $58.52 billion. Membership fees also rose by 7.6% compared to the previous year, totaling $1.12 billion. The company witnessed a 6.6% year-over-year rise in consolidated comparable sales, with notable increases across various regions: U.S. comparable sales grew by 6.2%, Canadian sales by 7.7%, and other international sales matched Canada’s growth rate. E-commerce comparable sales saw a substantial boost, jumping 20.7% year-over-year, bolstered by the sale of high-demand items and enhanced delivery options, including an expanded partnership with Uber (NYSE:).

The retailer’s strong consumer demand extends to discretionary items such as toys and health and beauty aids. The growth in Executive Membership is leading to higher engagement and sales. Costco is also focusing on developing new Kirkland Signature products that are at least 20% cheaper than national brands. The company is well-positioned to attract more in-store and online traffic by offering significant savings to consumers.

Costco’s service offerings are expanding, including those in travel and home improvement, contributing to its growth. Investments in technology and targeted media are aimed at increasing membership engagement and driving business expansion. The company’s robust warehouse model, efficient supply chain management, and increased e-commerce demand underpin its competitive edge.

The firm also highlighted Costco’s strong Return on Capital and increasing Economic Profit as drivers for continued shareholder value creation. With ongoing dividend increases and share repurchases, the company is committed to enhancing shareholder returns. Tigress Financial Partners suggests that the new price target reflects a potential total return, including dividends, of 15% from current levels.

InvestingPro Insights

Costco Wholesale’s recent financial performance has been bolstered by several key factors that resonate with Tigress Financial Partners’ positive outlook. With a market capitalization of $377.55 billion and a P/E ratio standing at 52.67, Costco showcases its significant presence in the market and investor confidence in its business model. The company’s revenue growth of 7.75% over the last twelve months as of Q3 2024, coupled with a 9.07% quarterly revenue growth in Q3 2024, reflects its strong revenue momentum that Tigress highlighted.

InvestingPro Tips highlight Costco’s ability to hold more cash than debt on its balance sheet and the fact that 11 analysts have revised their earnings upwards for the upcoming period, indicating a consensus view of its financial health and future prospects. Moreover, Costco has demonstrated a commitment to shareholder returns by maintaining dividend payments for 21 consecutive years, with a dividend yield of 0.55% and a notable dividend growth of 13.73% over the last twelve months as of Q3 2024.

For readers looking to delve deeper into Costco’s financials and future outlook, InvestingPro offers additional insights and tips. With the use of coupon code PRONEWS24, interested investors can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking access to a wealth of InvestingPro Tips that further analyze Costco’s position as a prominent player in the Consumer Staples Distribution & Retail industry. Currently, there are 20 additional InvestingPro Tips available for Costco, offering a comprehensive view of the company’s financial landscape.

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