Costco Wholesale Corporation (COST) Insider Trading Is Uncovering Many Things

If you can handle volatility, Costco Wholesale Corporation (NASDAQ:COST) is the stock to watch now. The stock closed lower on 14 March. The shares dropped -2.54 points or -1.07 percent at $233.84 with a light trade volume of 2.13 million shares. After opening the session at $236.13, the shares went as high as $236.38 and as low as $233.28, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $103 billion and now has 439.16 million shares outstanding. Costco Wholesale Corporation (COST) stock has gained 10.35 percent of market value in 21 trading days.

COST stock has a trailing 3-year beta of 0.94, offering the possibility of a lower rate of return, but also posing less risk. The portion of a company’s profit allocated to each outstanding share of common stock was $7.36 a share in the trailing twelve months. The stock’s value has surged 14.79 percent year to date (YTD) against a rise of 24.74 percent in 12 month’s time. The company’s shares still trade -4.62 percent away from its 1-year high of $245.16 and 29.31 percent up from 52-week low of $180.83. The average consensus rating on the company is 2.2, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a sell.

Costco Wholesale Corporation (COST) will probably climb 1.83 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $270-month high price target. This represents a whopping 15.46 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $250, which represents a return potential of 6.91 percent when compared to the closing price of the stock of $233.84 on Thursday, March 14. The lowest price target for the stock is $206 — slightly more than -11.91 percent from COST’s current share price.

History has shown that shares in Costco Wholesale Corporation have gone down on 20 different earnings reaction days and are predicted to add 0.02 percent when the company reports upcoming earnings. Investors will get their next glimpse of COST’s Q3 earnings on May 30. Analysts are forecasting revenue to climb 7 percent to $34.6B in the fiscal third quarter, while earnings are seen soaring by nearly 7.06 percent to $1.82 per share. It earned $2.01 per share, better than the $1.69, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $35.4B, worse than the $35.7B analysts expected. Earnings are estimated to increase by 17.5 percent this year, 7.5 percent next year and continue to increase by 10.82 percent annually for the next 5 years.

The stock is currently hovering around the first support level of $232.62. Below this, the next support is placed in the zone of $231.4. Till the time, the COST stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 73.44 on daily chart, which may remain a cause for concern. If the price breaks below $231.4 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $235.72 mark may result into a pull-back move towards $237.6 level.

Shares of Costco Wholesale Corporation (COST) are trading at a P/E ratio of 27.24 times earnings reported for the past 12 months. The industry COST operates in has an average P/E of 25.51. Its P/E ratio went as low as 22.48X and as high as 29.56 over the 5-year span.Further, it is sporting a 0.71 on the Price-to-Sales ratio. Compare this with the industry average P/S of 1.32. 12.9 percent is the gross profit margin for Costco Wholesale Corporation and operating margin sits at 3.1 percent. Along with this, the net profit margin is 2.2 percent.