Costco Stock Price Is Set Hit $300 Mark Again

Costco (NASDAQ: COST) stock price soared sharply over the last couple of years. The shares jumped 40% since the start of this year, extending the three-year rally to 90%.

The upside momentum has received support from improving financial numbers along with aggressive growth strategies.

COST Costco Wholesale Corporation weekly Stock Chart

Its financial results for the fourth quarter and fiscal 2019 highlights this trend. The company’s fourth-quarter revenue of $43 billion rose 7% from the past year period. Revenue for the full fiscal year grew 8% relative to the previous year.

Growth in Members and Stores Adds to Revenue Growth

Its active members at the end of fourth-quarter stood at 53.9 million. This is up from 53.1 million household members in the past year period. The total cardholders were standing around 98.5 million in Q4. This is up from 97.2 million cardholders in the previous quarter.

The company has also been expanding its foot-prints in global markets to enhance its revenue base. It opened 10 stores in the fourth quarter. The store opening includes eight in the U.S., first warehouse in China and one in the UK.

Costco operates 783 warehouses at present. It has 544 warehouses in the United States, 29 in the United Kingdom, 100 in Canada, 39 in Mexico, 26 in Japan, 13 in Taiwan, 16 in Korea and 11 in Australia.

Higher Earnings Potential Support Investors Sentiments

The company has the potential to convert revenue growth into big profits. The company generated a net income of $2.47 per diluted share in the fourth quarter. This is up from $2.36 per diluted share in the year-ago period.

Full-year earnings per share stood at $8.26, up significantly from $7.09 per share in the prior year. Along with investments in high margin areas, Costco’s strategy of reducing outstanding shares is supporting earnings growth. It bought 247 million shares in fiscal 2019.

Overall, several catalysts are supporting Costco stock price momentum. Its shares are likely to extend the bullish trend as the company expects similar financial growth in the next year.

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siraj sarwar

Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.
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