Costco’s shares are now up 1.3% pre-open on Thursday, after it reported March comparable sales of total that were higher than the average analyst estimate.

To beat the +11.2% estimate, total comparable sales were +17.2%. The U.S. comparable sales excluding fuels and currencies were at +12.7% which is better than the +9.2% estimate. In the five weeks ending April 3, U.S. comparable sales, excluding fuel and currencies, rose by 19% to $21.5 Billion Y/Y.

Mark Astrachan, Stifel Analyst, reiterated that COST is best in class and has continued reinvestment to maintain outperformance among peers.

“We expect that the company will invest further in price- and ecommerce, to enhance its value proposition. We view this as critical to maintaining favorable comp and traffic trends. It also helps to outperform peers. Costco is able to balance profit growth with sales in spite of the inflationary environment. Astrachan shared this view in a client note. “We expect this trend will continue. Driving high single-digit operational income growth over the coming 2-3 years,” Astrachan explained.

Michael Lasser, UBS analyst is positive about COST as well and believes there are more upsides for the shares.

We believe Costco has taken the correct steps in order to be relevant after the pandemic. Additionally, increased pressure on consumers could lead to another leg in growth both in memberships and retail sales. Lasser stated that these tailwinds are not fully reflected in the shares of the company.

The cost stock closed yesterday at $584.79

By Senad Karaahmetovic