Costco (COST 194.90, +8.37, +4.5%) is a leading membership warehouse selling a variety of merchandise, and gasoline, at low prices. Based on the company's fiscal first quarter results, which were reported after Thursday's close, it is abundantly clear that Costco sold a bunch of merchandise, and gasoline, at low prices. It's also abundantly clear that it continues to do just fine in the face of increased competition from the likes of Amazon.com (AMZN 1173.23, -1.03, -0.1%), Walmart (WMT 98.14, +1.01, +1.0%), Target (TGT 62.76, +0.83, +1.3%) and Kroger (KR 26.25, +0.35, +1.3%).
The report itself wasn't a complete surprise.
Costco provided a sales update in late November, which featured the news that net sales increased 13.3% in the first quarter to $31.1 billion, bolstered by a 43% increase in e-commerce sales, and that comparable sales surged 10.5%, or 7.9% excluding changes in gasoline prices and foreign exchange.
The earnings performance was missing from that sales update, yet it was no less encouraging.
Costco reported adjusted earnings of $1.36 per diluted share, slightly ahead of analysts' average estimate and up 16% from the same period a year ago on a comparable basis. The bottom-line growth wasn't helped by a reduced share count either.
The takeaway from the Costco earnings report is that it was a quality report, highlighted by impressive sales growth that showed it is faring just fine despite Amazon.com's encroachment on its turf.
Shareholders appreciate that important point and are bidding the stock higher today in a show of confidence in the company's operating model and earnings prospects. In fact, COST is trading at a new all-time high on today's move.