COSTCO (COST) EARNINGS REPORT DUE AFTER MARKET:THINGS TO KNOW

Costco is set to release its highly anticipated earnings report today after market close, and there's plenty of buzz surrounding the retail giant. Just yesterday, Costco stock hit an all-time high of $1,007, reflecting an impressive performance this year. The stock started 2024 at $650 and has surged by 50.69% year-to-date. With strong fundamentals, steady growth, and a history of rewarding shareholders, Costco is more than just a retailer—it's a powerhouse worth considering for your portfolio.

Costco's Financial Highlights

Costco’s financial health speaks volumes. The company not only pays a consistent dividend but also surprises shareholders with special dividends. For instance, in January, the company paid out a special dividend, a clear testament to its robust cash flow.

But here’s where it gets interesting: while many think of Costco as a wholesale retail business, its primary profit driver is membership fees. In 2023, Costco raked in $4.5 billion from membership fees alone, making up 72% of its total income of $6.3 billion.

To further strengthen this revenue stream, Costco increased its membership fees for the first time in seven years in 2024. The Gold Star membership rose to $60, while the Executive membership increased to $130. This move, combined with measures to curb membership-sharing, demonstrates Costco’s strategic focus on maximizing profitability.

Why Costco Stands Out

Anyone who’s been to a Costco store knows it’s always buzzing with activity. Parking lots are packed, checkout lines are long, and gas station queues stretch endlessly. The bulk-buying culture hasn’t slowed down, and Costco’s popularity among consumers shows no signs of waning.

For investors, this translates to a resilient business model with a loyal customer base. As a long-term play, Costco offers stability and growth. And while the stock might feel a little pricey at its current levels, there are strategic ways to gain exposure:

1. Wait for a Pullback: Keep an eye on the stock for any dips in price.
2. Sell Cash-Secured Puts: This strategy can help you enter at a lower cost basis while earning a premium.

What to Watch for in the Earnings Call

As Costco continues its upward momentum, one potential announcement could shake things up further—a stock split. Given the stock’s high price, a split would align with the trend seen among several major companies this year, making Costco shares more accessible to a broader range of investors.

Whether Costco meets or misses earnings expectations today, the company’s long-term prospects remain strong. Its unique business model, cash flow dominance, and customer loyalty make it a compelling addition to any portfolio.

Final Thoughts

Costco is more than a retailer—it’s a financial fortress built on recurring revenue and consumer trust. While you may struggle to find parking at its stores, you won't struggle to find reasons to invest in its stock. Costco is here to stay, and for investors, that’s a comforting thought.

Trading Strategy Considerations for Costco Earnings:

Sell the 915/910 Vertical Put Spread

For those who want to own Costco:

Sell Cash Secured Puts at 940 or below

Disclaimer: This is not financial advice. Please do your research or consult a financial advisor before making investment decisions.