COSTCO - Time to break above and beyond the All time High

19 godzin temu

Hi guys , today we are going to overview one of the retail giants COSTCO.

Fundamentals :

Revenue Growth and Profitability :
Consistent Revenue Growth: Costco has demonstrated steady revenue growth, driven by an expanding membership base, increased same-store sales, and international expansion.

Profit Margins: While Costco operates with low gross margins due to its focus on low pricing, its operating margins benefit significantly from recurring membership income. This structure ensures financial stability even in competitive environments.

Financial Health:
Balance Sheet Strength: Costco has a strong balance sheet with manageable debt levels and ample liquidity. Its ability to generate robust free cash flow supports both operations and shareholder returns.

Dividend Growth: Costco pays a reliable dividend, which has seen consistent growth over the years. Additionally, the company occasionally issues special dividends, highlighting its commitment to returning value to shareholders

Valuation Metrics:
Price-to-Earnings (P/E) Ratio: Costco often trades at a premium valuation compared to peers due to its consistent performance and strong brand equity.

Price-to-Sales (P/S) Ratio: Reflecting its robust revenue generation capabilities, Costco’s P/S ratio is higher than the retail industry average but supported by predictable growth.

And some potential risks : Thin Margins: Costco’s low-margin strategy leaves little room for error, and rising costs (e.g., labor, logistics) could pressure profitability.
Economic Sensitivity: While generally resilient, Costco could face challenges if economic conditions significantly impact discretionary spending or if competition intensifies.
Foreign Exchange Risk: With international operations, Costco is exposed to currency fluctuations that could affect earnings.

Technical analysis : The company has been running on a very healthy uptrend throughought 2024 and has had 4 green earning seasons which gives a positive bullish trend conversion,with analysists focusing on another green earnings in their Q4 report this gives us the necessary confirmations for a up-trend:

Entry has been made at : 921
Target will be above the ATH : 1030

As always my friends happy trading!

P.S. If you have questions or inquiries about one of my existing set-ups or personal questions / 1 on 1 sessions consider joining my community so you can follow up with me in private!