NEW YORK (TheStreet) -- Jefferies decreased its target price on Costco Wholesale (COST - Get Report) to $120, decreased its estimates and set a "neutral" rating. The firm noted the company's lower membership fee income.
The stock was flat at 9:41 a.m. on Thursday.
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- The revenue growth came in higher than the industry average of 6.8%. Since the same quarter one year prior, revenues slightly increased by 5.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The current debt-to-equity ratio, 0.43, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that COST's debt-to-equity ratio is low, the quick ratio, which is currently 0.56, displays a potential problem in covering short-term cash needs.
- COSTCO WHOLESALE CORP's earnings per share declined by 15.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, COSTCO WHOLESALE CORP increased its bottom line by earning $4.63 versus $3.90 in the prior year. This year, the market expects an improvement in earnings ($4.65 versus $4.63).
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Food & Staples Retailing industry and the overall market, COSTCO WHOLESALE CORP's return on equity exceeds that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: COST Ratings Report