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Costco Announces 7.4% Growth in Net Sales

- By Alberto Abaterusso

After the closing bell on April 10, Costco Wholesale Corp. (COST) informed shareholders that its net sales were $13.87 billion in March, which was a 7.4% increase from the same period of 2018.

Comparable sales increased 6.9% in the U.S., decreased 3.8% in Canada and jumped 1.6% in the international market. The company's total comparable sales grew 5.7%, and sales from e-commerce increased 20.6% in March.

Excluding the impact of gasoline prices, currency swings and the adoption of new standards for the recognition of revenues, same-store sales in March grew 5.5% in the U.S., 6.7% in Canada and 7.4% internationally. The company also recorded a 5.9% increase in total comparable sales and 20.1% growth in e-commerce sales.

The following chart shows the trend in March net sales over the past five years:

The chart below illustrates the increasing trend in Costco Wholesale Corp.'s net sales for the first 31 weeks of each fiscal year over the past five years through April 7, 2019.

The share price may head higher in coming days following these sales results. The stock was trading around $245.66 per share at close Wednesday for a market capitalization of roughly $108.04 billion.

The share price increased 30% for the past year through April 10 to above the 200-, 100- and 50-day simple moving average lines. This may suggest the share price is not cheap.

The 14-day Relative Strength Indicator is 70.06, meaning the stock is approaching overbought levels.

The share price at close Wednesday is also 32.4% above the 52-week low of $185.49 and just 0.6% below the 52-week high of $247.09. Further, the price-book ratio is 7.81 versus the industry median of 1.73, and the price-sales ratio is 0.74 versus the industry median of 0.48.

The Peter Lynch chart below also corroborates the idea that the stock is not trading cheaply.

Costco Wholesale Corp. pays a 57-cent cash quarterly dividend per common share for a forward dividend yield of 0.93% compared to an industry median of 2.22%. The S&P 500 index tops the dividend of Costco Wholesale Corp. with its 1.86% yield as of April 10.

However, Costco is a loyal dividend payer; it has paid a dividend to its shareholders since 2004. The next payment should occur sometime in the first part of May.

The stock has an overweight recommendation rating, meaning it is foreseen to outperform either the industry or the entire market within 52 weeks with an average target price of $245.04 per share, reflecting just 0.7% upside from the closing share price on Wednesday.

Disclosure: I have no positions in any security mentioned.

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This article first appeared on GuruFocus.