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Costco is about to offer a special dividend, analysts forecast

Costco Wholesale Corp. will offer a special dividend in the near future, according to badysts at Stifel and JPMorgan.


COST, -0.81%

The fiscal gains of the third quarter reported that they were well above expectations after the close of the session on Thursday. The sales growth in the same store of 5.5% also exceeded the FactSet consensus for an increase of 5.1%.

"We believe that Costco remains the best retailer of its kind that should continue to drive solid growth in offsets," wrote Stifel badysts led by Mark Astrachan. "We also believe that the company is likely to declare a special dividend in the next one to two quarters."

Stifel rates Costco shares with a target price of $ 261.

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"Taking a step back, Costco continues to have a large stake compared to its peers and most retailers, and it is a central long-term stake," wrote JPMorgan badysts. "In addition, we continue to believe that a special dividend is coming ($ 18.5 per share in total cash available)."

JPMorgan, which rates the overweight of Costco shares at a target price of $ 252, is particularly optimistic about the store retailer, which rates its value proposition "unmatched" and mentions its "loyal" customer base and its growth potential.

Costco reported a 90.7% renewal rate in the US. UU And Canada during the third quarter. Throughout the world, the renewal rate was 88.3%.

"Given the company's growing online offer and the best value proposition of its Visa credit offer, we see an opportunity to share opportunities both in-store and online," said JP Morgan. "Finally, we noticed the increase in the membership fee and the competitor Sam & # 39; s Club that closes ~ 63 stores in the United States and Puerto Rico to start the year; We believe that this is a good time to own Costco. "

Sam & # 39; s Club is part of Walmart Inc.

WMT, -0.73%


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In addition to investments in electronic commerce and international expansion, UBS badysts also point to the launch of the self-check in approximately 125 of the 536 total Costco locations in the US. UU

"Our members are using it," said Richard Galanti, Costco's CFO, on the earnings call, according to a FactSet transcript. "And that's saving some work in the front."

There are plans to reach 250 locations in the coming months.

"We believe adding this option can help alleviate pain in busy clubs (long queues), while helping Costco moderate their initial labor costs," wrote UBS badysts. "This type of investment in convenience should make Costco even more attractive to potential members in the coming years, helping to keep their steering wheel."

UBS qualifies the purchase of Costco shares with a target price of $ 280.

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Costco also used its call for profits to address the issue of margins and prices, particularly with respect to tariffs, that retailers such as Walmart and Target Corp.

TGT, + 0.07%

They have said that it will increase prices for consumers.

"[W]They have obviously asked us when prices go up, when costs go up, we want to be the last to upload them, and then, when prices fall, we want to be the first to lower them, "Galanti said.

The company has "expedited shipments" before some rates increase or come into effect, talk to new and existing sources and reduce some orders. Galanti said Costco is just beginning to see the impact and varies from one provider to another.

"We believe that we are in a good position in terms of our size, our capacity and our relationships with suppliers, and we will keep them informed about how it is going," he said.

Costco shares fell 1.1% in Friday's operations, but increased 17.3% in the year to date. The S & P 500 index

SPX, -1.32%

s up 10.2% for 2019 to date and the Dow Jones Industrial Average

DJIA, -1.41%

It has won almost 7%.

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