Costco Continues with its Positive Comparable Sales Trend

After reporting flat comparable-store sales (comps) in August, Costco Wholesale Corporation COST has continued to post positive comps so far in the year. Comps for the four-week period ended Nov 27, 2016 inched up 1%, following an increase of 2% in October and 1% growth in September. The company generated net sales of $9.95 billion in November, up 3% year over year. Notably, net sales increased 4% and 3% in October and September, respectively.

We note that shares of Costco have climbed 1.4% since Oct 5, 2016, when the company reported September sales results. However, the stock has declined 5.8% year to date and has underperformed the Zacks Categorized Retail-Wholesale industry that increased 2.8% in the same time frame.

Comps for November reflect an increase of 1% at both the U.S. as well as Canadian locations along with a decline of 2% at Other International locations. Excluding the impact of foreign currency fluctuations and gasoline prices, Costco’s comps for the month under review rose 2%. The company recorded comps increase of 1%, 3% and 4% across its U.S., Canadian and Other International locations, respectively.

For the 12-week period ended Nov 27, 2016, Costco reported 1% rise in comps, reflecting an increase of 1% and 4% at its U.S. and Canadian locations, respectively, and flat comps at International locations. Net sales for the period came in at $27.47 billion, an increase of 3% from year-ago period.

Costco currently operates 723 warehouses, which include 506 in the U.S. and Puerto Rico, 94 in Canada, 36 in Mexico, 28 in U.K., 25 in Japan, 12 in Korea, 12 in Taiwan, eight in Australia and two in Spain.

Zacks Rank

Costco currently carries a Zacks Rank #3 (Hold). Investors may consider better-ranked stocks such as Burlington Stores, Inc. BURL flaunting a Zacks Rank #1 (Strong Buy), and Big Lots Inc. BIG and Ross Stores, Inc. ROST both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Burlington Stores delivered an average positive earnings surprise of 25.6% in the trailing four quarters and has a long-term earnings growth rate of 19.9%.

Big Lots delivered an average positive earnings surprise of 83% in the trailing four quarters and has a long-term earnings growth rate of 13.5%.

Ross Stores delivered an average positive earnings surprise of 5% in the trailing four quarters and has a long-term earnings growth rate of 11.4%.

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