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Costco Stock: Robust December Sales Growth is a Bullish Indicator

Costco stock

Costco (NASDAQ: COST) stock price appears in a position to extend the upside momentum after topping the broader market index in fiscal 2019. The company’s revenue growth is among the biggest catalysts for the share price. It has been beating consensus sales growth month over month. The stronger than expected sales growth in December is among the bullish indicators for the COST share price.

Costco stock price soared by 40% in the past twelve months to the highest level in history. COST share price crossed $300 level several times in the final quarter of 2019. Its shares are currently trading around $294 – with a market capitalization of $128 billion.

Costco Stock

Sales Growth is Likely to Back Costco Stock Price

Costco’s comparable sales in December jumped 9% from the year-ago period. This is up from the consensus estimate of +7.1%. Its U.S. comparable sale grew 9.4% year over year in December.

The retailer said, “E-commerce sales in December were positively impacted by an estimated 20 percentage points. This is due to Thanksgiving/Black Friday/Cyber Monday occurring a week later this year versus last year. Total and comparable sales were positively impacted by approximately one percent,” notes the retailer.

In addition, the company’s strategy of enhancing its digital presence is working. This is evident from the E-commerce sales growth of 42.6% during the month.

The company’s comparable sales grew 5% year over year in the latest quarter. Moreover, the retailer experienced significant growth in earnings and cash flows. The sustainable financial growth bodes well for its cash returns.

Cash Returns Are Adding to Investors Sentiments

Costco is well set to make a double-digit dividend increase in fiscal 2020. This is because of its financial growth along with a dividend history. The company had increased its quarterly dividend by 14% in fiscal 2019, marking the 15 successive years of dividend growth. The latest financial numbers combined with a robust outlook suggests a double-digit dividend increase for this year. Overall, future fundamentals are strong for Costco stock.

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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.