Quick Summary
- CNBC’s Jim Cramer advised a Mad Money viewer to “buy some here” on Costco shares, currently hovering near $968, while waiting for potential dips
- Motley Fool Asset Management expanded its Costco holdings by 20.8% during the fourth quarter, purchasing 10,429 additional shares for a total of 60,650
- Several institutional investors boosted their positions throughout Q2 and Q4, pushing collective institutional ownership to 68.48%
- The warehouse retailer’s latest quarterly results showed revenue of $70.53B exceeding forecasts, though earnings per share fell short by a penny at $4.93
- Wall Street analysts assign a “Moderate Buy” consensus with a mean price target of $1,060.41, representing notable upside from current trading levels
Shares of Costco (COST) began Wednesday’s session at $968.59, sliding 0.6% during early trading and remaining significantly beneath the 52-week peak of $1,096.50.
Costco Wholesale Corporation, COST
During a recent Mad Money episode on CNBC, Jim Cramer responded to a viewer’s question regarding optimal timing for establishing a long-term stake in the warehouse giant. His recommendation was direct: initiate a position at current prices while remaining open to adding more on weakness.
“I want value just like I want value at a store,” Cramer explained. He noted the downside scenario involves the stock rallying directly to $1,025 with shareholders participating in the gains.
Cramer highlighted the stock’s valuation at 47 times earnings and recommended a measured approach, suggesting investors allow shares to “come in a little” instead of deploying capital all at once.
Institutional Investors Expand Their Stakes
As individual investors consider positioning, institutional capital has been flowing into the stock. Motley Fool Asset Management increased its holdings by 20.8% during Q4, acquiring 10,429 shares to reach a total position of 60,650 shares valued at approximately $52.3 million.
The trend extended beyond a single firm. Brighton Jones expanded its stake by 12.3% in Q4. Revolve Wealth Partners increased holdings by 13.1%. Multiple additional funds enlarged their positions during Q2. Institutional shareholders now control 68.48% of outstanding shares.
The stock’s 50-day moving average stands at $1,006.30, while the 200-day moving average registers at $965.46 — indicating current prices align closely with the longer-term technical trend.
Quarterly Results Show Revenue Strength, Dividend Increase
Costco unveiled quarterly results on May 28th. The company generated $70.53 billion in revenue, surpassing Wall Street’s $70.12 billion estimate. However, earnings per share of $4.93 came in one cent below the $4.94 analyst consensus.
The warehouse club also announced a dividend increase from $1.30 to $1.47 per share quarterly, distributed on May 15th. The annualized payout reaches $5.88, translating to approximately 0.6% yield.
E-commerce sales surged more than 21% during the period, while gasoline volume reached all-time highs. Despite these operational highlights, shares declined roughly 5% following the announcement — suggesting market participants prioritized valuation concerns over fundamental performance.
The retailer also implemented price reductions on four Kirkland Signature items spanning food, household products, and sporting goods categories.
Wall Street analysts remain predominantly constructive. Deutsche Bank elevated its price objective to $1,106 with a Buy recommendation. BTIG Research maintains a $1,125 target. Both Evercore and HC Wainwright continue with Buy ratings.
The consensus analyst price target sits at $1,060.41, supported by 22 Buy ratings, 11 Hold recommendations, and a single Sell rating.
The stock trades at a PE ratio of 48.72 with a market capitalization of $429.55 billion. Analyst projections point to full-year earnings per share of $20.38.
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