Costco Wholesale (NASDAQ:COST) recently posted its second-quarter earnings, which were a mixed bag for shareholders. While the company’s bottom line surpassed expectations, a miss on revenue projections raised alarm bells for some investors.
The company posted earnings per share of $3.92, which easily beat Wall Street expectations of $3.63 per share. Costco’s bottom line, however, was aided by a $94 million tax benefit related to the special dividend it announced last year.
The downside was that revenue of $58.4 billion was below analyst’ expectations of $59.1 billion. Comparable store sales, however, grew by 5.8% after adjusting for currency and gas prices, which was better than the 5% that Wall Street was expecting.
To muddy things further, Costco's leadership is in the midst of a transition with CFO Richard Galanti retiring and Gary Millerchip stepping in. And this comes on the heels of CEO Craig Jelinek stepping down as well, marking the end of an era for Costco.
Overall, the market wasn’t impressed with the earnings numbers as Costco’s shares have dipped following the release of the earnings report. But on a year-to-date basis, the stock is still up around 10%. And over the past 12 months, shares of Costco still look impressive with 50% gains.
If you’re a buy-and-hold investor, Costco can still be an excellent stock to add to your portfolio. While it isn’t a terribly cheap investment to own in the short run, especially amid some unexciting results and uncertainty in the management ranks, this is still a top retail stock to own. And there’s a lot more growth ahead for the company, particularly in international markets.
