Key Takeaways
- During a Mad Money segment, Jim Cramer advised a viewer to initiate a Costco position at current levels near $968, though he’d prefer additional weakness for better value
- Motley Fool Asset Management expanded its COST holdings by 20.8% during Q4 2024, acquiring 10,429 additional shares for a total position of 60,650 shares
- Institutional ownership has reached 68.48% of outstanding shares, with several major funds increasing their stakes throughout Q2 and Q4
- The warehouse retailer’s most recent quarterly results showed revenues of $70.53B exceeding forecasts, though earnings per share came in a penny short at $4.93
- Wall Street consensus points to a “Moderate Buy” recommendation with analysts setting an average price objective of $1,060.41
Shares of Costco (COST) began Wednesday’s session at $968.59, declining 0.6% during the trading day and remaining significantly beneath the stock’s 52-week peak of $1,096.50.
Costco Wholesale Corporation, COST
During a recent Mad Money broadcast on CNBC, host Jim Cramer responded to a viewer’s question regarding optimal timing for establishing a long-term Costco position. His recommendation was direct: initiate a position at current prices while remaining open to adding more if shares decline further.
“I want value just like I want value at a store,” Cramer said. He added that the worst case is the stock runs straight to $1,025 and you’re along for the ride.
The CNBC personality acknowledged the shares are currently valued at 47 times forward earnings and recommended a measured approach, suggesting investors allow the stock to “come in a little” instead of deploying all capital at once.
Major Funds Continue Accumulating Shares
As individual investors evaluate entry timing, large institutional players have been steadily accumulating. During the fourth quarter, Motley Fool Asset Management expanded its Costco stake by 20.8%, purchasing 10,429 additional shares to reach a total holding of 60,650 shares valued at approximately $52.3 million.
The firm wasn’t acting in isolation. Brighton Jones expanded its COST allocation by 12.3% in Q4. Revolve Wealth Partners increased exposure by 13.1%. Additional asset managers also enhanced their positions during Q2. Collectively, institutional shareholders control 68.48% of the company’s outstanding equity.
Technically, the stock’s 50-day moving average stands at $1,006.30, while the 200-day moving average registers at $965.46 — indicating shares are currently trading near their long-term technical support level.
Recent Financial Performance and Dividend Increase
Costco released quarterly results on May 28th. Top-line revenue reached $70.53 billion, surpassing the Street’s expectation of $70.12 billion. However, earnings per share of $4.93 fell just one cent below the consensus estimate of $4.94.
The membership warehouse chain also announced a dividend increase from $1.30 to $1.47 per share quarterly, distributed on May 15th. On an annualized basis, the dividend totals $5.88, translating to approximately a 0.6% yield at current prices.
E-commerce revenue surged more than 21% year-over-year, while gasoline sales volume achieved an all-time company record. Despite these positive operational metrics, the stock declined roughly 5% following the earnings announcement — suggesting investors remain focused on valuation concerns rather than business fundamentals.
The retailer also implemented strategic pricing reductions across four Kirkland Signature items spanning food, household goods, and sporting equipment categories.
The analyst community maintains a generally optimistic stance. Deutsche Bank elevated its price objective to $1,106 with a Buy recommendation. BTIG Research projects a $1,125 target. Both Evercore and HC Wainwright maintain Buy ratings on the shares.
Wall Street’s consensus price target sits at $1,060.41, supported by 22 Buy ratings, 11 Hold ratings, and only one Sell recommendation.
The stock currently trades at a PE ratio of 48.72, with total market capitalization of $429.55 billion. Analysts are forecasting full-year earnings per share of $20.38.
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