Costco Wholesale Corporation (NASDAQ:COST)
Shares of Costco were dramatically higher in after-market trading on Thursday September 29, 2016 after the company reported better-than-expected earnings. Shares have traded in a 52-week range from a high of $169.73 to a low of $138.57. Shares were as high as $150.27 in the aftermarket following the earnings report. A close look at the numbers indicates net profit rose 1.6% to $ 779 million dollars despite some higher wage costs, lower gasoline sales and some pressures on food items like meat and eggs. In a market that saw a heavy midday sell off in the general indices and high-beta specific stocks, it will be interesting to see how Costco trades Friday- which coincides with the third quarter ending on September 30.
The Chart
In the above chart you will see the daily price history going back to the beginning of 20160. You can see the red resistance line up at the top and a green support line down lower- where price landed on and closed at the end of trading on September 29th 2016. There is an oval area with a white middle indicating where shares would like to open and trade on Friday given the strong results from their earnings.
Company Comments
Chief Financial Officer Richard Galanti said some 11.4 million co-branded American Express (NYSE:AXP) cards, representing about 7.4 million accounts, had been transferred to new Visa Citi cards, and about 85% of those accounts have now been activated with Costco. Another 1.1 million members have applied for the new card since June 20.
Mr. Galanti said the company hopes co-branded Visa cards become a “top of wallet” card for shoppers, something that was tricky with American Express (NYSE:AXP), which isn’t accepted in as many locations. Mr. Galanti also said shoppers are spending strongly on discretionary items like electronics and apparel. Costco’s shoppers generally skew higher income than Walmart (NYSE:WMT) or mainstream grocers.
“As we have gone into New Orleans and Birmingham and Rochester and Toledo, these are markets that again were not high on the radar seven or eight years ago and what we have seen is that our deal works,” he said. The Issaquah, Wash.-based chain currently operates 715 warehouses, including 501 in the U.S..- wsj.com
Company Profile
Costco Wholesale Corporation, together with its subsidiaries, operates membership warehouses. The company offers branded and private-label products in a range of merchandise categories. It provides dry and institutionally packaged foods; snack foods, candy, tobacco, alcoholic and nonalcoholic beverages, and cleaning and institutional supplies; appliances, electronics, health and beauty aids, hardware, and garden and patio; meat, bakery, deli, and produce; and apparel and small appliances. The company also operates gas stations, pharmacies, food courts, optical dispensing centers, photo processing centers, and hearing-aid centers; and engages in the travel business. In addition, it provides gold star (individual) and business membership services. As of October 29, 2015, it operated 690 warehouses, including 482 warehouses in the United States and Puerto Rico, 90 in Canada, 36 in Mexico, 27 in the United Kingdom, 23 in Japan, 12 in Korea, 11 in Taiwan, 7 in Australia, and 2 in Spain. Costco Wholesale Corporation also sells its products through online. The company was formerly known as Costco Companies, Inc. Costco Wholesale Corporation was founded in 1976 and is based in Issaquah, Washington.