COST
Costco’s cart still has momentum
Costco is set to report fourth-quarter results on Thursday after the closing bell, and the vibe from BTIG is basically: don’t count the warehouse giant out just yet. Analyst Robert Drbul kept a Buy rating on the stock and slapped a $1,125 price target on it, arguing that Costco’s core engine — traffic, comps, and membership fees — is still humming along.
The stock, meanwhile, has been doing its best impression of a roller coaster that forgot the upward track, with shares down 0.39% to $895.86 at the time of publication. But the bigger question isn’t the day’s tiny wobble. It’s whether Costco can keep convincing investors that its high-priced membership model still deserves the VIP rope line.
The numbers behind the membership cult
Drbul thinks Costco will post about $94 billion in net sales, up 11.3% from a year ago, alongside earnings of $6.59 a share. He also expects gross margin to expand by 18 basis points, even with gas-price noise making things a little messy. That matters because Costco’s business is basically a giant trust exercise: if members keep renewing and showing up in big, slightly overstuffed carts, the whole machine keeps working.
A few things investors will be glued to:
- Renewal rates, which have started to stabilize
- Executive memberships, which grew 9.6% in the third quarter and now make up about 75% of sales
- Membership fee income, which slowed earlier this year and needs to show it’s not losing steam
- Traffic trends, especially if higher gas prices keep nudging more people toward the clubs
Big picture: the valuation test
Costco has been one of those stocks where the story is bigger than the spreadsheet. Sure, the macro backdrop is messy and consumers are being picky, but Costco keeps making the same boring thing look magical: people pay to shop there, then pay again to renew. If Thursday’s report shows that rhythm is still intact, the premium valuation gets a fresh excuse to stick around. If not, well, even the warehouse king can get a little crowded at the checkout.