Costco Wholesale Corp. (COST) had a holly, jolly Christmas.
In December, Costco's same-store sales grew an impressive 11.5%, topping Wall Street's estimate of just 8.1% growth and Gordon Haskett analyst Chuck Grom's forecast of 9% growth.
According to Grom, December was the fifth-straight month Costco reported double-digit total sales growth, which the analyst said is a "testament to the model, which is generating strong comps from both new and mature units."
In addition to strong comp sales growth, overall sales at Costco were up 14.3% year over year in December to $14.94 billion. December's results included a 150-basis point benefit from foreign exchange, a 110-basis point benefit from higher gas prices over last year and a 250-basis point gain owed to the extra shopping day in the month given when New Year's Day fell.
Traffic trends at Costco were impressive, too, up 6.6% globally and 6.4% in the U.S.
Especially worth noting was Costco's digital sales growth, up 33.3% in December. The e-commerce win comes out ahead of the trailing four-month average of 31.5%, Grom noted. It seems, then, that Amazon.com Inc. (AMZN - Get Report) hasn't eaten into Costco's sales drastically at all.
Costco passed the December hurdle "with flying colors," said Grom in the Jan. 4 note. "The company's recent string of successes looks poised to continue."
Grom placed a $200 price target on Costco shares, implying they'll run up another roughly 5%. Over the last 12 months, Costco stock has rallied 17%.
UBS analysts were similarly bullish on Costco in a Jan. 4 note, adding that the company could also benefit from a lower corporate tax rate that could drive 15% earnings accretion excluding any reinvestments.
"That said, we think there's a good chance COST elects to invest not only in price, but also in stores. This could make its membership proposition even more attractive, and speed up its virtuous cycle," UBS said. "Thus, while the stock has had a good run, we think it still has further upside as estimate get revised higher."
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