Costco stock wavered near a buy zone early Friday following its Q3 results late Thursday. The wholesaler continues to see comparable sales growth in the U.S. amid broader consumer weakness and tariff pressures. But those gains have slowed, with total same-store sales missing views for the quarter.
Costco reported a 13% increase in earnings to $4.28 per share. Revenue increased 8% to $63.2 billion.
Analysts polled by FactSet expected earnings of $4.24 per share on $63.13 billion in sales.
Total same-store sales increased 5.7%, just below analyst estimates for 6% growth. Excluding gasoline, overall comparable sales increased 8%.
U.S. same-store sales rose 6.6% for the period. Comparable sales for Canada locations climbed 2.9%.
Comparable Sales Growth Slows, Gold Bar Limit
Costco on May 7 reported that April comparable store sales increased 5.2% in the U.S., though that has steadily slowed since the 9.2% growth in Jan. Excluding gas, those comps increased 7.1% in April, down from 9.2% in Jan. April sales also increased 7% from last year to $19.8 billion, while March sales increased 8.6%.
Bernstein in mid-May said it sees a "limited tariff risk" given COST's bargaining power and ability to swap its merchandise selection. The firm lowered its price target to 1,148 from 1,153 and kept an outperform rating on shares. Bernstein said COST stock was "priced to perfection" at 53x price-to-earnings, but a pullback could present a better entry point.
Costco on May 14 partnered with Affirm to allow monthly payment plans for bulk online purchases that range from $500 to $17,500, an effort to help cash-strapped consumers and small businesses. In other business moves, Costco placed a limit on gold bar purchases to a max of 2 units per 24 hours following high demand and falling gold prices. The wholesaler updated its website to include the purchase limit in mid-May, according to reports.
Wells Fargo in April 2024 estimated that Costco was selling $100 million to $200 million in gold bars per month following the summer 2023 launch.
Costco in April also hiked its quarterly cash dividend to $1.30 from $1.16 per share.
Costco Stock Near Buy Zone
Costco was little-changed early Friday and eased a fraction. Shares ticked down slightly during Thursday and Wednesday trade.
COST stock is trading just below a buy zone, above a 1,018 cup-with-handle entry.
The buy zone, which stretches 5% beyond the buy point, extends to 1,068.90.
Shares first broke out above the buy point on May 13.
Costco stock has found support along its 21-day exponential moving average and is bouncing around its 10-day line.
COST stock's 21-day average true range is 1.76%.
The average true range is a metric available on IBD's MarketSurge that gauges the characteristic breadth of a stock's behavior. Stocks that tend to make large jumps or dives in daily action, the kind that can trigger sell rules and shake investors out of a stock, have a high ATR. Stocks that tend to make more incremental moves have lower ATRs.
With the S&P 500 and Nasdaq now in a power trend, investors can buy stocks with ATRs up to 8%, though they should be wary of being too concentrated in high-octane names.
Shares are up about 10% so far this year.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
