The COVID-19 outbreak put a massive restraint on the global wholesale market with supply chain disruptions amid the government-imposed lockdowns worldwide. Moreover, the Russia-Ukraine war also led to economic sanctions on multiple countries, affecting global trade.
However, despite the macroeconomic barriers, the global wholesale market managed to grow at an 8.2% CAGR over the past year to $45.50 trillion in 2022 and is expected to reach $57.51 trillion by 2026.
Additionally, consumer spending remained robust this year and is showing continued resiliency amid the persistently high inflation. The U.S. retail sales rose 1.3% in October, beating the economist estimates of 1% and marking the biggest monthly gain since February.
Costco Wholesale Corporation (COST)
COST operates membership warehouses in the United States, Puerto Rico, Canada, the United Kingdom, Mexico, Japan, Korea, Australia, Spain, France, Iceland, China, and Taiwan. The company provides branded and private-label products in a range of merchandise categories. It operates more than 838 membership warehouses around the globe.
On October 12, COST’s Board of Directors declared a quarterly dividend of 90 cents per share, payable on November 10, 2022. The company pays $3.60 annually as a dividend, representing a yield of 0.74% at its current share price. COST’s dividend payouts have grown at a CAGR of 11.5% over the past three years and 12.4% over the past five years. Moreover, the company has a record of dividend growth for 18 consecutive years.
In the fiscal 2022 fourth quarter ended August 28, 2022, COST’s total revenues increased 15% year-over-year to $72.09 billion. Its operating income grew 9.8% from the prior-year period to $2.50 billion. Net income and income per common share attributable to Costco came in at $1.89 billion and $4.20, up 11.9% and 11.7% year-over-year, respectively.
Analysts expect COST’s revenue and EPS to rise 7.9% and 10.2% year-over-year to $244.89 billion and $14.63, respectively, for the fiscal year ending August 2023.
The stock has gained marginally over the past month to close the last trading session at $488.66.
COST’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, translating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Within the A-rated Grocery/Big Box Retailers industry, COST is ranked #26 out of 39 stocks.
Beyond what is stated above, you can see other POWR Ratings for COST here.
BJ’s Wholesale Club Holdings, Inc. (BJ)
BJ operates warehouse clubs on the eastern coast of the United States. The company offers merchandise, perishable, gasoline, and other ancillary services. It sells its products through websites and mobile apps.
On December 1, BJ announced the launch of its retail media program, BJ’s Media Edge™, using Microsoft Corporation’s (MSFT) PromoteIQ. The program offers brands an omnichannel approach to drive growth, accelerate new product launches, and deliver on their business goals. This should help the company expand its revenue streams.
On November 18, BJ opened its brand-new club in Wayne, New Jersey, marking the retailer’s 24th location in the state. This opening closely followed the previous openings in New Albany, Ohio, and Greenburgh, New York and should thus help the company expand its footprint.
BJ’s total revenues increased 12.2% year-over-year to $4.79 billion in the third quarter that ended October 29, 2022. During the same period, the company’s operating income increased 12.8% year-over-year to $191.97 million, while its adjusted EBITDA increased 19.2% year-over-year to $272.31 million. Adjusted net income for the quarter came in at $135.83 million, up 7.9% from the prior-year period.
Street expects BJ’s EPS for the current fiscal year ending January 2023 to increase 16.4% year-over-year to $3.78. During the same period, its revenue is expected to increase 15.2% year-over-year to $19.19 billion. The company has surpassed consensus EPS estimates in each of the trailing four quarters.
The stock has gained 23.2% over the past nine months to close the last trading session at $69.64.
BJ has an overall rating of B, translating to a Buy in our POWR Ratings system. It also has a grade of B for Value and Sentiment. The stock is ranked #17 in the same industry.
Click here to see the other ratings of BJ for Growth, Momentum, Stability, and Quality.
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COST shares were trading at $477.40 per share on Tuesday afternoon, down $11.26 (-2.30%). Year-to-date, COST has declined -15.34%, versus a -16.56% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More...
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