Key Takeaways
- CNBC’s Jim Cramer endorsed purchasing Costco at its current $968 price level, suggesting investors build positions gradually while seeking better value
- Motley Fool Asset Management expanded its Costco holdings by 20.8% during Q4, purchasing 10,429 additional shares for a total of 60,650
- Institutional ownership has reached 68.48% of outstanding shares, with several major funds increasing their positions in recent quarters
- The retailer’s most recent quarterly results showed revenue exceeding forecasts at $70.53B, though earnings per share fell short by $0.01 at $4.93
- Wall Street analysts project a “Moderate Buy” consensus with an average target price of $1,060.41, representing significant upside from current trading levels
Shares of Costco (COST) opened at $968.59 during Wednesday’s session, declining 0.6% and remaining notably beneath the 52-week peak of $1,096.50.
Costco Wholesale Corporation, COST
During a recent Mad Money episode on CNBC, Jim Cramer responded to a viewer question regarding optimal timing for establishing a long-term Costco position. His recommendation was direct: initiate a position at current levels while remaining open to adding more on potential dips.
“I want value just like I want value at a store,” Cramer explained. He emphasized that even in a worst-case scenario where shares climb directly to $1,025, investors would still benefit from the upward movement.
Cramer acknowledged the stock’s elevated valuation at 47 times earnings and recommended a measured approach, advocating for incremental purchases rather than deploying all capital at once.
Smart Money Continues Accumulating Shares
As individual investors weigh their options, large institutional players have been steadily accumulating shares. Motley Fool Asset Management boosted its holdings by 20.8% during the fourth quarter, acquiring 10,429 additional shares to reach a total position of 60,650 shares valued at approximately $52.3 million.
The trend extended beyond a single firm. Brighton Jones increased its allocation by 12.3% in Q4. Revolve Wealth Partners added 13.1% to its position. Additional institutional buyers expanded their stakes during Q2 as well. Combined, institutional shareholders now control 68.48% of the company’s outstanding stock.
The stock’s 50-day simple moving average stands at $1,006.30, while the 200-day moving average rests at $965.46 — indicating current prices align closely with the stock’s long-term trajectory.
Quarterly Results Show Revenue Strength, Slight EPS Miss
Costco unveiled quarterly results on May 28th. Top-line revenue reached $70.53 billion, surpassing Wall Street’s projection of $70.12 billion. However, earnings per share of $4.93 fell one cent short of the $4.94 consensus estimate.
The warehouse retailer simultaneously announced a dividend increase from $1.30 to $1.47 per share quarterly, distributed on May 15th. This brings the annual dividend to $5.88, yielding approximately 0.6% at current price levels.
E-commerce sales surged more than 21% year-over-year, while gasoline volumes reached all-time highs. Nevertheless, shares dropped roughly 5% following the announcement — suggesting market participants prioritized valuation concerns over operational performance.
The company also implemented price reductions on four Kirkland Signature items spanning food, household goods, and sporting equipment categories.
Wall Street analysts remain predominantly bullish. Deutsche Bank raised its price objective to $1,106 with a Buy recommendation. BTIG Research maintains a $1,125 target. Both Evercore and HC Wainwright continue their Buy ratings.
The consensus analyst price target registers at $1,060.41, supported by 22 Buy ratings, 11 Hold recommendations, and only one Sell rating.
The stock carries a price-to-earnings ratio of 48.72, with a market capitalization of $429.55 billion. Wall Street forecasts full-year earnings per share of $20.38.
