why is COST "consensus rating "Buy""

The consensus rating for Costco Wholesale is "Buy" for several reasons: 1. **Strong Financial Performance**: Costco's financial metrics indicate a healthy business. The company reported a net income of $1.79 billion and total revenue of $63.72 billion in the most recent quarter. The net income growth rate was 2.58%, and the revenue growth rate was 9.04%. These figures suggest that Costco is growing its top and bottom lines, which is a positive sign for investors. |code|Ticker|Name|Date|Net Income YoY|Total Revenue YoY|Diluted EPS YoY|market_code| |---|---|---|---|---|---|---|---| |COST|COST.O|Costco Wholesale|2024 Q1|16.49560117302053|6.1759465069713615|16.612377850162872|185| |COST|COST.O|Costco Wholesale|2024 Q2|18.89495225102319|5.746752071798213|18.787878787878793|185| |COST|COST.O|Costco Wholesale|2024 Q3|29.10906298003072|9.072099612287504|29.010238907849818|185| |COST|COST.O|Costco Wholesale|2024 Q4|8.981481481481483|0.9602351182558684|8.847736625514397|185| |code|Ticker|Name|Date|Closing Price|market_code| |---|---|---|---|---|---| |COST|COST.O|Costco Wholesale|20240417|715.19|185| |COST|COST.O|Costco Wholesale|20240418|711.25|185| |COST|COST.O|Costco Wholesale|20240419|709.51|185| |COST|COST.O|Costco Wholesale|20240422|715.46|185| |COST|COST.O|Costco Wholesale|20240423|722.68|185| |COST|COST.O|Costco Wholesale|20240424|723.89|185| |COST|COST.O|Costco Wholesale|20240425|721.86|185| |COST|COST.O|Costco Wholesale|20240426|729.18|185| |COST|COST.O|Costco Wholesale|20240429|726.33|185| |COST|COST.O|Costco Wholesale|20240430|722.9|185| |code|Ticker|Name|Date|Net Income YoY|Net Income|market_code| |---|---|---|---|---|---|---| |COST|COST.O|Costco Wholesale|2024 Q1|16.49560117302053|1.589E9|185| |COST|COST.O|Costco Wholesale|2024 Q2|18.89495225102319|1.743E9|185| |COST|COST.O|Costco Wholesale|2024 Q3|29.10906298003072|1.681E9|185| |COST|COST.O|Costco Wholesale|2024 Q4|8.981481481481483|2.354E9|185| |code|Ticker|Name|Date|Total Revenue YoY|Total Revenue|market_code| |---|---|---|---|---|---|---| |COST|COST.O|Costco Wholesale|2024 Q1|6.1759465069713615|5.7799E10|185| |COST|COST.O|Costco Wholesale|2024 Q2|5.746752071798213|5.8442E10|185| |COST|COST.O|Costco Wholesale|2024 Q3|9.072099612287504|5.8515E10|185| |COST|COST.O|Costco Wholesale|2024 Q4|0.9602351182558684|7.9697E10|185| |code|Ticker|Name|Date|Diluted EPS YoY|Diluted EPS|market_code| |---|---|---|---|---|---|---| |COST|COST.O|Costco Wholesale|2024 Q1|16.612377850162872|3.58|185| |COST|COST.O|Costco Wholesale|2024 Q2|18.787878787878793|3.92|185| |COST|COST.O|Costco Wholesale|2024 Q3|29.010238907849818|3.78|185| |COST|COST.O|Costco Wholesale|2024 Q4|8.847736625514397|5.29|185| 2. **Consistent Growth**: Over the past three years, Costco has shown a compound annual growth rate (CAGR) of 11.6% in net income, 5.89% in revenue, and 12.26% in diluted EPS. This consistent growth indicates a strong business model and the company's ability to generate increasing profits over time. 3. **Profitability and Margin Health**: Costco's gross margin is 12.73%, net margin is 2.85%, and operating margin is 3.53%. These margins are healthy for a retail company, especially considering the low margins are a part of Costco's business model. The company's return on equity (ROE) is 14.58%, and return on assets (ROA) is 6.71%, indicating efficient use of shareholders' and assets' equity to generate profits. |code|Ticker|Name|Date|Gross Profit Margin|Operating Profit Margin|ROA|ROE(Average)|Net Profit Margin|market_code| |---|---|---|---|---|---|---|---|---|---| |COST|COST.O|Costco Wholesale|2024 Q2|12.598|3.412737330201908|6.5358|14.5445|2.8665|185| |COST|COST.O|Costco Wholesale|2024 Q3|12.581|3.503742360777312|9.8565|21.4098|2.8686|185| |COST|COST.O|Costco Wholesale|2024 Q4|12.6133|3.5825869610497816|14.2755|30.2671|2.8952|185| |COST|COST.O|Costco Wholesale|2025 Q1|12.9395|3.473797686280188|3.272|7.4803|2.893|185| 4. **Market Outperformance and Resilience**: Despite economic uncertainties, Costco has outperformed the market, with a 33% total return in the past 12 months compared to the S&P 500's 9%. This resilience is a testament to the company's business model and customer loyalty. 5. **Analyst Confidence**: Analysts have maintained a "Buy" rating on Costco, with some increasing their price targets to $925 and $950. This indicates that analysts believe the stock has room to grow from its current price. 6. **Strategic Expansions and Customer Loyalty**: Costco has been expanding its business strategically, with positive results. The company reported a 7.1% rise in net sales for July and a 6% increase in customer traffic. The high renewal rate for membership fees, at 93%, also supports the company's revenue stream and future growth. 7. **Dividend and Cash Flow**: Costco has a dividend yield of 0.58%, which may not be significant, but it indicates the company's commitment to returning value to shareholders. The company's cash flow from operations is robust, with $2.75 billion reported in the most recent quarter, providing a strong foundation for future investments and shareholder returns. |code|Ticker|Name|Date|Operating Cash Flow YoY|Operating Cash Flow|market_code| |---|---|---|---|---|---|---| |COST|COST.O|Costco Wholesale|2024 Q1|78.19923371647509|4.651E9|185| |COST|COST.O|Costco Wholesale|2024 Q2|-77.09899749373433|7.31E8|185| |COST|COST.O|Costco Wholesale|2024 Q3|94.61388708630759|2.999E9|185| |COST|COST.O|Costco Wholesale|2024 Q4|-20.59060402684564|2.958E9|185| In summary, the "Buy" consensus rating for Costco Wholesale reflects the company's strong financial performance, consistent growth, profitability, market outperformance, analyst confidence, strategic expansions, and customer loyalty. These factors combined make Costco a compelling investment opportunity for investors seeking stability and growth.