|Data: Miercuri, 06.01.2016, 09:15:45 | Mesaj # 1
|Costco Wholesale Corporation NASDAQ cheap nike free run
Costco (NASDAQ:COST) is fully valued and now is an excellent time for
shareholders to cash in on the investment. Before dismissing this claim, please
take the time to understand the reasoning below.
What is the outlook for Costco? We can get a feel for the strength of this
nike free run for sale position by looking at its potential results in the future.
Assuming exceptional performanceEven if COST significantly beats estimates in
the coming quarters, there will likely be only small changes to its market
price. This is evidenced both from a market sentiment perspective and a value
perspective.Costco reported its 4th quarter results on Wednesday, October 10th,
and they surpassed the already optimistic expectations. Specifically, EPS of
$1.39/share beat consensus estimates of $1.31 driven mainly by a revenue stream
11.9% higher on a year over year basis. Despite crushing estimates, the stock
closed up only 1.92%. This happened because expectation of nearly perfect
performance is already priced in. It seems reasonable to assume the market
response to future good news would be similarly subdued.On a current basis,
Costco trades at a P/E around 26. Even once we factor in projected earnings
growth this ratio remains somewhat lofty around 22. Additionally, it trades at a
price/book of 3.43. The current heavy valuation of the stock serves as a
deterrent to any significant price increases.
Between value logic and the recent market behavior it seems strong
performance, even that surpassing expectations, will lead to only small returns.
The downside, however, is far more www.nikeshoesa.com/nike-free-run-c-8 significant.
Assuming mediocre performanceGiven the strong openings of its new stores and
increased membership, it seems unlikely that Costco could experience losses in
the nearterm. However, a number of emerging factors make mediocre results, at or
slightly below expectations, very plausible.These companies can already compete
with Costco on a value to the consumer basis, but now they have a level of
convenience which cannot be matched by a bigbox store. While many of Costco's
customers appreciate the thrill of the treasurehunt style of shopping, some of
the more efficiency oriented consumers will undoubtedly be lost.As a service to
its members, COST provides discounted gasoline. Pending oil price fluctuations,
this can create significant loss to Costco.The retail industry has a notoriously
low barrier to entry. We must not forget the possibility of another company
operating under a similar model entering the field. Costco already has a direct
competitor in Sam's Club (part of WalMart) which has used the membership and buy
in bulk philosophy for decades.
Regardless of the cause, a mediocre performance could cause investors to
rethink their valuation of COST and drop its price to a more stable earnings
multiple maybe in the 1820 range.
Costco is a great company and hatsoff to them for the stellar performance.
The stock seems fully valued and the relatively small upside potential does not,
in my opinion, justify the relatively larger downside risk. It is too strong to
short, but now is a great time for current investors to cash in on returns.
Disclosure: This article is for informational purposes cheap nike free run shoes only.
Disclosure: I have no positions in any stocks mentioned, and no plans to
initiate any positions within the next 72 hours. I wrote this article myself,
and it expresses my own opinions. I am not receiving compensation for it (other
than from Seeking Alpha). I have no business relationship with any company whose
stock is mentioned in this article.