Costco pops on December comparable sales beat, analysts reflect positively By Investing.com

By Senad Karaahmetovic

Shares of Costco (NASDAQ:) are trading about 2% higher after the retailer reported comparable sales for December that beat the analyst consensus.

Costco said its total comparable sales jumped 5.5% in December, beating the 5% consensus. Excluding fuel and currencies, comp sales surged 6.4%, the company aided.

Costco also said it recorded sales of $23.8 billion for the five weeks to January 1, which represents an increase of 7% compared to the same period last year. For the 18 weeks that ended January 1, Costco generated $82.16B in net sales, representing an increase of 7.6% from $76.34B last year.

Citi analysts said the December results were evidently fueled by a strong pre-Christmas week.

“It was a good month, with comps back in line with Oct levels after decelerating in Nov. We continue to believe that COST is well positioned to navigate these inflationary times, but trading at ~18x F23 EBITDA we believe the risk/reward is balanced,” they said in a note.

Bank of America analysts also reiterated a Buy rating on COST stock after December sales came in better than expected.

“[We] continue to view Costco as well-positioned LT given: 1) Share gains given COST’s strong value proposition and price positioning, 2) potential store growth acceleration given excess demand, 3) competitive advantages afforded by COST’s unique sourcing model, 4) stable & rising EBITDA margins despite volatile gas prices, 5) earnings support from a potential future membership fee increase, and 6) attractive valuation when compared to all-time high ROIC,” the analysts wrote.