Thoughts on Costco

September 29, 2016
After-hours buzz: COST, MENT, AA & more

Costco's stock ticked up about 2 percent in after-hours trade Thursday. The wholesale retail giant reported quarterly earnings of $1.77 per share, beating analyst estimates of $1.73 per share. It missed on revenue, however, reporting $36.56 billion, compared to analyst estimates of $36.81 billion.

For what it is worth, Costco coupon books have been fairly lame lately, especially when it comes to food (our biggest purchases). Perhaps that explains some of the revenue miss. We've certainly spent less there (in favor of local grocery store sales). Did find a really nice pair of leather boots last time I went though. The shockingly low price was too much to resist. After trying them on at home, will probably buy another pair. No risk of us cancelling our membership.

From an investor standpoint, I'd be much more worried about Sam's Club. My local store has the advantage of shorter lines, a much emptier parking lot, and a lack of customers. Makes me wonder how much longer that store will continue to exist. Further, there is always some risk of us cancelling our membership. Wouldn't take much. The membership was most useful when we were buying drugs for our dog. She passed away, and so too, our membership perhaps. It's renewal time and it might actually come down to a coin toss. If we do cancel, Costco will see more revenue from us.

In my opinion, as a customer and over the long-term:

Costco > Sam's Club