Costco stock: should you buy it on the post-earnings dip?

2024-03-08 10:39:37 ET

Costco Wholesale Corporation (NASDAQ: COST) is in the red this morning after coming in shy of Street estimates for total sales in its fiscal second quarter.

Is it worth buying Costco stock today?

Still, CFRA Research analyst Arun Sundaram says “it was a pretty good” earnings report.

He was particularly pleased with “strong eCommerce sales growth” and an 8.0% increase in membership fee income the Nasdaq-listed retail firm reported last night.

Costco stock is trading down only because it has “run up a lot” already and, therefore, needed “really strong earnings to support the rich valuation”. Still, Sundaram sees upside in $COST to $770 which signals potential for a 4.0% gain from here only.

You can read the full earnings release of Costco Whole Corporation on this link .

Costco has healthy renewal rates

Note that Costco stock is currently up roughly 15% versus the start of 2024.

Still, Arun Sundaram is convinced it could push a bit higher from here based on pricing. On CNBC’s “ Closing Bell Overtime ”, he said last night:

$COST is lowering prices on discretionary goods. That will drive more traffic and membership income. Renewal rates in U.S. and Canada is around 93%. So, nothing to worry about at this point.

It is also worth mentioning here that Costco Wholesale Corporation does pay a dividend yield as well which makes up for another good reason to have it in your investment portfolio. Among other notable bulls of Costco shares is famed investor Jim Cramer.

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