|Bid||211.11 x 900|
|Ask||211.17 x 2200|
|Day's range||210.02 - 211.74|
|52-week range||150.00 - 211.74|
|PE ratio (TTM)||30.90|
|Earnings date||23 May 2018 - 29 May 2018|
|Forward dividend & yield||2.28 (1.10%)|
|1y target est||214.96|
Target (TGT), Walmart (WMT), and Costco (COST) have been adjusting their businesses to offer convenience and value as the threat of Amazon (AMZN) continues. During its fiscal first quarter, its digital sales rose 66%, while comps, excluding fuel, increased 1.4%. Walmart and Target have both significantly ramped up their e-commerce businesses trying to match the services of Amazon.
Shares of Kroger (KR) surged over 10% on Thursday to inch near their 52-week high after the company posted better-than-expected quarterly results. Investors were also likely pleased to see that the grocery chain's e-commerce initiatives started to pay off. The question is should investors think about buying grocery stocks as Amazon-based (AMZN) fears seem to have been overblown.
BJ’s private-equity owners will retain control of a company with margins that lag rivalsBJ’s Wholesale is focused on the New England area and has room to grow, says the company. BJ’s Wholesale Club, operator of 215 warehouse clubs across 16 states largely along the U.S.’s eastern seaboard, is planning an initial public offering, returning to the public markets after a seven-year spell as a private company. The company(BJ)is offering 37.5 million shares priced at $15 to $17 each, which would raise about $600 million at the midpoint of the range.
Ironically for a company known for selling at a discount, I think BJ’s is trying to sell its stock to the public at too high a price premium. BJ’s SPO – it did an IPO in August 1997 before being taken private by CVC Capital Partners and Leonard Green for $2.8 billion in 2011 – values the bulk retailer at $2.15 billion. BJ’s was New England’s first wholesale club – starting in 1984 and has grown to 215 large-format, high volume warehouse clubs and 134 gas stations in 16 states, with $12.5 billion in revenue and $50 million in net income in 2017, according to BJ’s June 18 offering prospectus.
In this final part of the series, we’ll look at Wall Street’s recommendations and current valuations of Kroger (KR). Kroger is covered by 26 Wall Street analysts, who have jointly rated the stock a 2.2 on a scale of 1.0 (strong buy) to 5.0 (sell).
LoveSac chairs sit on display at a LoveSac store January 13, 2005 in Chicago, Illinois. After starting in 1995 selling iconic beanbag-style chairs for the budget-challenged college crowd, Lovesac has graduated along with its target customers. With founder Shawn Nelson still at the helm, who started the company while attending the University of Utah, priced between $13-$15.
Most of the analysts providing recommendations on Costco (COST) stock have maintained a “buy” rating. Several analysts raised their target prices on Costco following the company’s fiscal third-quarter earnings and strong monthly sales for May. UBS raised its target price to $225.00 per share on Costco stock from $215.00.
After falling ~20.0% in 2017, Kroger’s (KR) stock price has fallen 4.6% so far this year. The company is trading more than 20.0% below its 52-week high price. However, Kroger isn’t the only consumer staples stock that’s stuck in the red.
A startup backed by Bill Gates is tackling the problem of avocados that ripen too fast. Apeel Sciences uses food waste and other plant material to create a product that delays the aging of produce, potentially giving U.S. retailers an opportunity to cut down on the amount of fresh food they throw out. “There’s a visceral reaction to throwing away an avocado,” said James Rogers, the 33-year-old chief executive officer of Santa Barbara, California-based Apeel.
Costco (COST) stock was trading at a forward PE (price-to-earnings) multiple of 27.7x on June 15, which was significantly higher than its peers. If we look at the historical trend, Costco stock has always traded at a premium when compared with Walmart (WMT) and Target (TGT) stock, as can be seen in the graph below. In comparison, the S&P 500 Index (SPX) was trading at a forward PE multiple of 17.5x on June 15.
Groceries account for 56.0% of Walmart’s sales, and the retailing giant is leaving no stone unturned to capture further market share. According to a Raymond James survey, Walmart reduced its prices by 4.0% between February and April this year. Walmart’s nationally branded food products had lower prices than even Dollar General and Family Dollar.
Costco’s (COST) earnings per share have seen double-digit growth over the past five quarters. In comparison, Walmart (WMT) has also improved its EPS. Target’s (TGT) EPS returned to a growth trend during the recently reported fiscal first quarter.
Costco (COST) has posted impressive sales performance over the past several quarters and has outperformed both Walmart (WMT) and Target (TGT). During the recently concluded quarter, Costco’s comps (comparable store sales) in the US grew 7.7% (excluding the changes in fuel prices and currency movements). This is higher than Walmart’s 2.1% growth (excluding fuel) and Target’s 3.0% increase.
At a time when retail giants like Walmart (WMT), Target (TGT), and Amazon (AMZN) are fiercely competing for a greater share of consumer spending, Costco (COST) is enjoying smooth sailing. When Amazon disrupted the grocery space with its 2017 Whole Foods acquisition, Wall Street analysts were most concerned about the prospects for Costco stock.
Matt Patsky’s interest in sustainable investing came early: At 11, he took his savings from cutting lawns and shoveling driveways to buy his first investment, Dreyfus Third Century, an early socially responsible mutual fund. Patsky, 54, was named Boston-based Trillium Asset Management’s CEO in 2009 after the death of its founder, Joan Bavaria, an art student and college dropout who became a pioneer of socially responsible investing. Trillium today has $2.6 billion under management, all managed under sustainable principles.
Amazon (AMZN) might have forever changed the grocery industry exactly one year ago when the e-commerce giant bought Whole Foods for roughly $14 billion on June 16, 2017. Today, grocery delivery is commonplace across the entire industry.
Costco’s recent earnings report showed solid growth. Although Costco might be considered a direct competitor to Amazon (and Costco is even headquartered in the same region), it is doing fine. In my new book The Shopping Revolution: How Successful Retailers Win Customers in an Era of Endless Disruption (published June 12 by Wharton Digital Press), I have developed the Kahn Retailing Success Matrix.
Shares of Costco Wholesale (COST) are trading higher Friday, helped by a bullish note from Cowen & Co. Analyst Oliver Chen reiterated an Outperform rating and raised his price target to $228 from $214, writing that its traffic and comparable-store sales are "some of the strongest in retail." Chen likes the fact that Costco's e-commerce business's momentum looks "real and improved" in the most recent quarter, and believes that the company is still in the early innings of its online-sales growth. Earlier this month, Costco got a boost from upbeat May sales.
Walmart (WMT) stock was trading at a forward PE (price-to-earnings) multiple of 17.3x as of June 13, which is higher than that of Target (TGT) but significantly below Costco (COST). Moreover, the company is trading almost on par with the S&P 500 Index (SPY). Given the company’s 2.5% dividend yield and its expected 9.1% increase in fiscal 2019 EPS, Walmart’s valuation seems fair. In comparison, Target and Costco stock were trading at forward PE multiples of 14.6x and 27.3x, respectively.
In the year since its acquisition of Whole Foods, Amazon has had its share of challenges with executives and suppliers.
Consumer staples have recently been showing signs of life, bouncing 3 percent in June and one chart watcher sees two names that could lead the group higher.