What Happened:
Shares of membership-only discount retailer Costco (NASDAQ:COST) fell 7.7% in the afternoon session after the company reported fourth-quarter results with revenue falling short of analysts' expectations. Free cash flow also underwhelmed during the quarter with the company recording a significant amount of cash burn. Overall, we think this was a mixed quarter considering fellow retail peer Walmart (NYSE:WMT) beat Wall Street's sales estimates convincingly. Investors were likely expecting better topline numbers from Costco, and the stock is down.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Costco? Access our full analysis report here, it's free.
What is the market telling us:
Costco's shares are not very volatile than the market average and over the last year have had no moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
Costco is up 11.8% since the beginning of the year, and at $727.94 per share it is trading close to its 52-week high of $785.59 from March 2024. Investors who bought $1,000 worth of Costco's shares 5 years ago would now be looking at an investment worth $3,194.
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