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Costco Increases Net Sales in April by 7.3%

- By Alberto Abaterusso

After the closing bell on Wednesday, Costco Wholesale Corp. (COST) informed the stock market that its net sales grew 7.3% year-over-year to $11.60 billion in April. Shares jumped 1.02% to $243.81 in after-hours trading.

Comparable sales grew 7.7% in the U.S., declined 1.9% in Canada and went slightly up 0.9% internationally. The company's total comparable sales increased 5.4% and sales from e-commerce grew 23.6% in April.


Ignoring the impact of gasoline prices, currency swings and the adoption of new standards for the recognition of revenues, same-store sales went up 5.6% in the U.S., 2.3% in Canada and 6% in the international market. The company also recorded a 5.2% jump in total comparable sales and a 19.9% increase in e-commerce sales.

The following chart illustrates that the trend in April net sales over the past five years is positive.

The chart below shows the trend in Costco's net sales for the 31 weeks through the end of the retail month of April over the past five years through May 5, 2019. The trend is positive.

March and April net sales results indicate that Costco is on track to beat forecasters on revenue for the third quarter quarter of fiscal 2019, which will end on May 31. Revenue is expected to total $34.64 billion on average. The U.S. retailer posted net sales of $13.87 billion for the retail month of March.

These sales results may produce a positive impact on the share price of Costco in the following days.

The stock was trading around $241.34 per share at close Wednesday for a market capitalization of roughly $106.16 billion.

For the past 52 weeks through May 8, the share price is up 23% to above the 200, 100 and 50-day simple moving average lines. Thus, the share price may not be its cheapest.

The 14-day relative strength index of 35 suggests the stock is neither oversold nor overbought.

The stock has a 52-week range of $189.51 to $248.7, a price-book ratio of 7.67 versus the industry median of 1.73, and a price-sales ratio of 0.73 compared to the industry median of 0.48.

The Peter Lynch chart also suggests that the stock is not cheap.

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Costco Wholesale Corp. has paid dividends since 2004. On May 24, the retailer will pay a 65-cent cash quarterly dividend per common share, which is up 14% from its prior payment, to its shareholders of record May 10. The ex-dividend date is scheduled for May 9. Based on the share price at close on Wednesday, the payment leads to a forward dividend yield of 1.08% versus the industry median of 2.22% and versus the S&P 500 index's dividend yield of 1.91%.

Wall Street issued an overweight recommendation rating for shares of Costco Wholesale Corp. This means that the stock is expected to outperform either the industry or the entire market within 52 weeks with an average target price of $249.25 per share, for a 2.2% increase 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.