Will Costco (COST) Stock Be Hurt by Celery Recall? - TheStreet

NEW YORK (TheStreet) -- Costco Wholesale  (COST) - Get Report stock is rising 0.38% to $163 in pre-market trading Friday after one of the company's suppliers announced a recall of the celery-and-onion mix used in chicken salad at its stores.

The Issaquah, WA-based grocer's rotisserie chicken salad has been linked to at least 19 cases of E. coli, which is a bacteria that can cause diarrhea, fever and nausea. 

Taylor Farms Pacific, which supplied the celery that was in Costco's chicken salad, recalled a number of products that contained its celery, according to an FDA statement on Thursday.

The Montana Department of Health tested a sample of the mix and it tested positively for E. coli, according to the statement.

Additionally, Taylor Farms said it was recalling products offered at 7-Eleven, Safeway (SWY), King Sooper, Raleys and the Savemart brands because they may include the tainted celery.

Separately, TheStreet Ratings team rates COSTCO WHOLESALE CORP as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:

We rate COSTCO WHOLESALE CORP (COST) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, notable return on equity and good cash flow from operations. We feel its strengths outweigh the fact that the company shows low profit margins.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 12.0%. Since the same quarter one year prior, revenues slightly increased by 0.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • COSTCO WHOLESALE CORP has improved earnings per share by 9.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, COSTCO WHOLESALE CORP increased its bottom line by earning $5.37 versus $4.66 in the prior year. This year, the market expects an improvement in earnings ($5.65 versus $5.37).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Food & Staples Retailing industry. The net income increased by 10.0% when compared to the same quarter one year prior, going from $697.00 million to $767.00 million.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. 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.
  • Net operating cash flow has increased to $1,028.00 million or 22.09% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 10.30%.
  • You can view the full analysis from the report here: COST

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.