Costco Wholesale (NASDAQ:COST) Stock Jumps 2% After Dividend Announcement

Key Points

• Costco shares rose 2% after announcing a $30-per-share special dividend—about $13.3 billion in total—payable December 4 to shareholders of record November 24; the company also reauthorized a $4 billion stock buyback.
• Recent quarterly results beat expectations: earnings were $6.75 per share versus a $6.54 estimate, while revenue grew 11.1% year over year to $95.72 billion.
• Analyst sentiment is broadly positive, with a “Moderate Buy” consensus and an average price target of $1,092.23, though some analysts cite Costco’s high valuation as a risk.

Shares of Costco Wholesale Corporation (NASDAQ:COST - Get Free Report) traded up 2% on Wednesday following a dividend announcement from the company. The company traded as high as $1,091.92 and last traded at $1,087.61. 2,225,098 shares were traded during trading, an increase of 1% from the average session volume of 2,211,298 shares. The stock had previously closed at $1,066.14.The newly announced dividend which will be paid on Friday, December 4th. Stockholders of record on Tuesday, November 24th will be issued a dividend of $30.00 per share. The ex-dividend date is Tuesday, November 24th. Costco Wholesale's dividend payout ratio (DPR) is presently 28.32%.

Wall Street Analyst Weigh In

Several equities analysts have recently weighed in on the company. Bank of America reduced their price target on Costco Wholesale from $1,200.00 to $1,095.00 and set a "buy" rating for the company in a report on Wednesday, September 16th. Deutsche Bank dropped their price target on shares of Costco Wholesale from $1,091.00 to $1,079.00 and set a "buy" rating on the stock in a research note on Monday, September 28th. Truist Financial cut their price objective on shares of Costco Wholesale from $1,011.00 to $955.00 and set a "hold" rating on the stock in a research report on Friday, September 25th. Roth Capital restated a "sell" rating and set a $781.00 price objective on shares of Costco Wholesale in a research note on Friday, September 25th. Finally, Argus reaffirmed a "buy" rating and issued a $1,230.00 target price on shares of Costco Wholesale in a report on Monday, September 28th. One research analyst has rated the stock with a Strong Buy rating, twenty-three have assigned a Buy rating, nine have assigned a Hold rating and one has issued a Sell rating to the stock. Based on data from MarketBeat.com, Costco Wholesale presently has an average rating of "Moderate Buy" and a consensus price target of $1,092.23.

Costco Wholesale Trading Up 2.0%

The firm has a market cap of $481.95 billion, a P/E ratio of 52.39, a price-to-earnings-growth ratio of 4.71 and a beta of 0.85. The stock has a fifty day simple moving average of $957.28 and a 200 day simple moving average of $973.36. The company has a debt-to-equity ratio of 0.11, a quick ratio of 0.62 and a current ratio of 1.06.

Costco Wholesale (NASDAQ:COST - Get Free Report) last posted its quarterly earnings results on Thursday, September 24th. The retailer reported $6.75 earnings per share for the quarter, topping the consensus estimate of $6.54 by $0.21. Costco Wholesale had a return on equity of 27.60% and a net margin of 3.04%. The firm had revenue of $95.72 billion during the quarter, compared to analysts' expectations of $94.97 billion. During the same quarter in the previous year, the business earned $5.87 earnings per share. The company's revenue was up 11.1% on a year-over-year basis. On average, research analysts expect that Costco Wholesale Corporation will post 22.70 earnings per share for the current fiscal year.

Costco Wholesale News Roundup

Investors following COST have been watching these news items:

• Positive Sentiment: Costco declared a $30-per-share special dividend, totaling about $13.3 billion, payable December 4 to shareholders of record November 24. The board also reauthorized a $4 billion buyback, signaling substantial cash generation and a commitment to returning capital. Costco dividend and repurchase announcement
• Positive Sentiment: Bernstein raised its price target to $1,155 from $1,143 and maintained an Outperform rating. Jim Cramer also reiterated his bullish view, citing Costco’s value-focused model and ability to keep prices low. Street attention after Costco’s dividend
• Negative Sentiment: Valuation is the key risk: Freedom Broker downgraded COST from Buy to Hold, saying the stock’s valuation warranted caution. Another downgrade commentary likewise flags the premium valuation; Costco’s supplied metrics show a P/E above 52. Freedom Broker downgrade

Insider Activity

In other Costco Wholesale news, EVP William Richard Wilcox sold 1,100 shares of the company's stock in a transaction dated Tuesday, October 13th. The shares were sold at an average price of $958.21, for a total transaction of $1,054,031.00. Following the transaction, the executive vice president owned 3,094 shares in the company, valued at approximately $2,964,701.74. This represents a 26.23% decrease in their position. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which is accessible through this hyperlink. Also, EVP Claudine Adamo sold 2,200 shares of the firm's stock in a transaction dated Tuesday, September 29th. The shares were sold at an average price of $915.93, for a total transaction of $2,015,046.00. Following the sale, the executive vice president directly owned 7,134 shares in the company, valued at approximately $6,534,244.62. The trade was a 23.57% decrease in their position. The SEC filing for this sale provides additional information. 0.10% of the stock is currently owned by corporate insiders.

Hedge Funds Weigh In On Costco Wholesale

Several hedge funds and other institutional investors have recently modified their holdings of COST. Bank of America Corp DE bought a new stake in shares of Costco Wholesale during the 2nd quarter valued at about $6,781,946,000. State Street Corp lifted its stake in shares of Costco Wholesale by 31.7% in the 2nd quarter. State Street Corp now owns 23,901,594 shares of the retailer's stock worth $22,359,224,000 after purchasing an additional 5,749,362 shares during the period. Legal & General Group Plc bought a new position in shares of Costco Wholesale in the 2nd quarter worth approximately $2,362,188,000. Ascentis Wealth Management LLC boosted its holdings in shares of Costco Wholesale by 103,637.0% in the second quarter. Ascentis Wealth Management LLC now owns 2,500,062 shares of the retailer's stock worth $2,549,616,000 after buying an additional 2,497,652 shares during the last quarter. Finally, Corient Private Wealth LP purchased a new position in shares of Costco Wholesale in the second quarter worth approximately $726,689,000. 68.48% of the stock is owned by institutional investors.

About Costco Wholesale

Costco Wholesale Corporation operates membership-based warehouse clubs that offer a broad selection of merchandise at generally low prices. Its products include groceries, fresh foods, appliances, electronics, apparel, furniture, and household goods, as well as its Kirkland Signature private-label line. The company also provides services such as gasoline stations, pharmacies, optical and hearing-aid centers, food courts, and travel offerings. Costco serves members through warehouses and online channels.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.