Stock Analysis

Costco Wholesale (NasdaqGS:COST) Sees 6% Price Dip Despite Strong Earnings

NasdaqGS:COST
Source: Shutterstock

Costco Wholesale (NasdaqGS:COST) announced robust financial results for the second quarter and six months ending February 16, 2025, reporting increased sales, revenue, and net income compared to the previous year. Despite this strong financial performance, Costco's share price recorded a 6.45% decline over the past quarter. This period was marked by investor concerns amidst broader market volatility driven by economic uncertainty and the prospect of a recession. The market's reaction to Costco's earnings was out of step with the positive financial results and might be influenced by labor issues such as Teamsters' strike threats, as well as executive changes, including the retirement of Richard Galanti as Executive Vice President. Moreover, the recent improvement in consumer price index data did not offset the lingering caution. While tech stocks rallied, the broader market remains jittery, as reflected in significant drops in major indices, further straining Costco's stock performance despite its solid business fundamentals.

Navigate through the intricacies of Costco Wholesale with our comprehensive balance sheet health report here.

NasdaqGS:COST Earnings Per Share Growth as at Mar 2025
NasdaqGS:COST Earnings Per Share Growth as at Mar 2025

Contemplating Other Strategies? The best AI stocks today may lie beyond giants like Nvidia and Microsoft. Find the next big opportunity with these smaller AI-focused companies with strong growth potential through early-stage innovation in machine learning, automation, and data intelligence that could fund your retirement.

The last five years have witnessed a remarkable total return of 229.48% for Costco Wholesale. This impressive performance has been driven by several key developments. Consistent earnings growth has been a significant factor, with earnings increasing by 13.9% annually over the period. During the fiscal years, Costco also declared regular dividends, providing steady income to shareholders, such as the recent US$1.16 per share dividend reported in January 2025. Importantly, Costco's returns over the past year have surpassed both the US market's 8.8% return and the Consumer Retailing industry's 24.7% return, offering further context for its long-term achievements.

Despite this robust growth, recent labor disputes, such as the Teamsters' strike threat in early 2025, have added elements of uncertainty. However, strong sales figures, including a 9.2% rise in January sales to US$19.51 billion, underpin Costco's enduring appeal. Leadership changes, notably Richard Galanti's retirement as Executive Vice President, also play a role in shaping future directions but haven't derailed the company's sustained growth trajectory.

Got skin in the game with Costco Wholesale? Elevate the management of your position by using Simply Wall St's portfolio, where intuitive tools await to help optimize your investment outcomes.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

If you're looking to trade Costco Wholesale, open an account with the lowest-cost platform trusted by professionals, Interactive Brokers.

With clients in over 200 countries and territories, and access to 160 markets, IBKR lets you trade stocks, options, futures, forex, bonds and funds from a single integrated account.

Enjoy no hidden fees, no account minimums, and FX conversion rates as low as 0.03%, far better than what most brokers offer.

Sponsored Content

New: AI Stock Screener & Alerts

Our new AI Stock Screener scans the market every day to uncover opportunities.

• Dividend Powerhouses (3%+ Yield)
• Undervalued Small Caps with Insider Buying
• High growth Tech and AI Companies

Or build your own from over 50 metrics.

Explore Now for Free

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

About NasdaqGS:COST

Costco Wholesale

Engages in the operation of membership warehouses in the United States, Puerto Rico, Canada, Mexico, Japan, the United Kingdom, Korea, Australia, Taiwan, China, Spain, France, Iceland, New Zealand, and Sweden.

Solid track record with excellent balance sheet.