Costco (COST, $338.70) beats Q4 earnings estimates; but COVID-19 expenses climb

Costco Wholesale Corp.  fiscal fourth quarter earnings beat analysts’ expectations. However,  rising coronavirus expenses, including wage increases, had an impact on the results.

The retail company’s  said earnings for the three months ending in August, came in at $3.04 per share, well above analysts’ forecast of $2.85 per share. It was also +13% higher year-over-year.

Revenues climbed +12.5% year-over-year to $52.3 billion in the quarter. Same-store sales rose by +11.4% -- the most in two decades .

However, pandemic-related expenses increased, topping $280 million for the quarter, higher than $100 million forecast. The costs included a $2 per hour premium paid to employees, which equates to around $14 million per week, according to the company.

According to Tickeron, COST is in upward trend: price rose above 50-day moving average on September 21, 2020

COST moved above its 50-day Moving Average on September 21, 2020 date and that indicates a change from a downward trend to an upward trend. In 31 of 44 similar past instances, the stock price increased further within the following month. The odds of a continued upward trend are 70%.

Current price $338.70 crossed the resistance line at $340.91 and is trading between $340.91 resistance and $327.60 support lines. Throughout the month of 08/24/20 - 09/24/20, the price experienced a +0.83% Uptrend. During the week of 09/17/20 - 09/24/20, the stock enjoyed a +2% Uptrend growth.

Technical Analysis (Indicators)

Bullish Trend Analysis

The Momentum Indicator moved above the 0 level on September 24, 2020. You may want to consider a long position or call options on COST as a result. In 55 of 99 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are 56%.

Following a +0.74% 3-day Advance, the price is estimated to grow further. Considering data from situations where COST advanced for three days, in 227 of 394 cases, the price rose further within the following month. The odds of a continued upward trend are 58%.

The Aroon Indicator entered an Uptrend today. In 187 of 336 cases where COST Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are 56%.

Bearish Trend Analysis

The 10-day RSI Indicator for COST moved out of overbought territory on September 03, 2020. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 46 similar instances where the indicator moved out of overbought territory. In 15 of the 46 cases, the stock moved lower in the following days. This puts the odds of a move lower at 33%.

The Stochastic Indicator entered the overbought zone. Expect a price pull-back in the foreseeable future.

The Moving Average Convergence Divergence Histogram (MACD) for COST turned negative on September 04, 2020. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 43 similar instances when the indicator turned negative. In 16 of the 43 cases the stock turned lower in the days that followed. This puts the odds of success at 37%.

Following a 3-day decline, the stock is projected to fall further. Considering past instances where Apple declined for three days, the price rose further in 50 of 62 cases within the following month. The odds of a continued downward trend are 34%.

COST broke above its upper Bollinger Band on September 02, 2020. This could be a sign that the stock is set to drop as the stock moves back below the upper band and toward the middle band. You may want to consider selling the stock or exploring put options.

Fundamental Analysis (Ratings)

Tickeron has a negative outlook on this ticker and predicts a further decline by more than 4.00% within the next month with a likelihood of 45%. During the last month, the daily ratio of advancing to declining volumes was 1.11 to 1.

The Tickeron Profit vs. Risk Rating rating for this company is 2 (best 1 - 100 worst), indicating low risk on high returns. The average Profit vs. Risk Rating rating for the industry is 77, placing this stock better than average.

The Tickeron PE Growth Rating for this company is 42 (best 1 - 100 worst), pointing to consistent earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.

The Tickeron Price Growth Rating for this company is 42 (best 1 - 100 worst), indicating steady price growth. COST’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.

The Tickeron SMR rating for this company is 54 (best 1 - 100 worst), indicating slightly weaker than average sales and a marginally profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.

The Tickeron Valuation Rating of 93 (best 1 - 100 worst) indicates that the company is significantly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (9.12) is normal, around the industry mean (5.78). P/E Ratio (41.49) is within average values for comparable stocks, (54.60). COST's Projected Growth (PEG Ratio) (14.98) is very high in comparison to the industry average of (1.21). Dividend Yield (0.83) settles around the average of (1.03) among similar stocks. P/S Ratio (0.84) is also within normal values, averaging (0.88).

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