Costco Wholesale (COST) Off To A Strong Start In Pre-Market Activity

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Costco Wholesale ( COST) as a pre-market leader candidate. In addition to specific proprietary factors, Trade-Ideas identified Costco Wholesale as such a stock due to the following factors:

  • COST has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $195.6 million.
  • COST traded 10,260 shares today in the pre-market hours as of 8:00 AM.
  • COST is up 2.3% today from Friday's close.

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More details on COST:

Costco Wholesale Corporation, together with its subsidiaries, operates membership warehouses. The company offers branded and private-label products in a range of merchandise categories. The stock currently has a dividend yield of 1.2%. COST has a PE ratio of 26.4. Currently there are 12 analysts that rate Costco Wholesale a buy, no analysts rate it a sell, and 9 rate it a hold.

The average volume for Costco Wholesale has been 1.8 million shares per day over the past 30 days. Costco Wholesale has a market cap of $51.8 billion and is part of the services sector and retail industry. The stock has a beta of 0.40 and a short float of 1% with 2.55 days to cover. Shares are down 1.2% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Costco Wholesale as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and growth in earnings per share. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 4.8%. Since the same quarter one year prior, revenues slightly increased by 7.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Food & Staples Retailing industry average. The net income increased by 3.0% when compared to the same quarter one year prior, going from $459.00 million to $473.00 million.
  • Net operating cash flow has increased to $1,490.00 million or 10.45% when compared to the same quarter last year. Despite an increase in cash flow, COSTCO WHOLESALE CORP's average is still marginally south of the industry average growth rate of 13.02%.
  • The current debt-to-equity ratio, 0.42, 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 0.57, displays a potential problem in covering short-term cash needs.
  • COSTCO WHOLESALE CORP's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern 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. For the next year, the market is expecting a contraction of 0.9% in earnings ($4.59 versus $4.63).

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