Costco reports a record £3.14 billion in profit in the fourth quarter

Costco Wholesale Corp. (NASDAQ: COST) reported a record £3.14 billion in quarterly profit on Thursday that represents a 9.3% annualised growth. The company attributed its hawkish performance to customers stockpiling on essential items amidst COVID-19 in recent months.

Despite an upbeat financial report, Costco still tanked 2.5% in extended trading on Friday. Shares of the company are now exchanging hands at £265. The stock had started the year 2020 at £229 per share and had plummeted to £217 per share in late March. Confused about choosing a reliable stockbroker to trade online? Here’s a comparison of the top few to make selection easier for you.

CFO Richard Galanti of Costco commented on the earnings report and said:

“As people are spending less on travel, air, and hotel and dining out, they seem to have redirected at least some of those dollars to categories like lawn and garden, furniture, mattresses, exercise equipment, bicycles, housewares, cookware, domestics and the like.”

Costco’s Q4 financial results versus analysts’ estimates

Costco said that its earnings came in at £1.09 billion in the fiscal fourth quarter that translates to £2.45 per share. It reported £41.88 billion of sales in Q4 that were 12.5% higher than £37.25 billion in the same quarter last year.

In comparison, experts had forecast the company to record a lower £40.86 billion of revenue on £2.20 per share of earnings in the recent quarter.

In terms of same-store sales, Costco registered an 11.4% year over year growth in the fourth quarter that marked the largest annualised gain since 2000, as per FactSet. The wholesale corporation’s annual comparable-store sales came at 9.2% higher on Thursday, the highest in almost 16 years.

The American multinational noted £128 billion of revenue in the full fiscal year up 9.3% from the previous year. In the prior quarter (Q3), Costco had missed on earnings expectations, as per the report published in May.

Raymond James analysts reiterate their rating and price target on Costco

In a statement earlier this month, Raymond James analysts reiterated their price target of £278.42 and rating of ‘outperform’ on Costco and remarked:

“Costco’s consistent revenue growth across merchandise categories reinforces our view that the membership model is arguably the most attractive business model in hardline retail today.”

At the time of writing, Costco Wholesale Corporation is valued at £120 billion and has a price to earnings ratio of 41.49.