Costco (NASDAQ:COST) has once again delivered strong financial results, buoyed by robust sales of gold bars and its signature warehouse deals on everyday essentials.

The wholesale club reported adjusted earnings per share (EPS) of $3.92, significantly surpassing estimates of $3.62. Although revenue reached $58.44 billion, a 5.7% increase year over year, it slightly missed expectations of $59.04 billion, according to Bloomberg data.

Excluding gas and foreign exchange impacts, same-store sales soared by 5.8%.

In the U.S., same-store sales grew by a stronger-than-expected 4.8%. Canada exceeded estimates with a 9% increase in same-store sales, while international stores experienced a higher-than-anticipated growth of 8.2%.

Digital sales surged by more than 18% compared to the previous year, fueled by strong demand for gold bars, silver, and appliances, Costco CFO Richard Galanti revealed during a conference call with analysts.

Membership fees, a significant revenue stream for Costco, rose to $1.11 billion from $1.03 billion a year earlier, and surpassed the $1.08 billion reported in Q1.

Despite the strong performance, Costco’s shares dipped by 4.6% in premarket trading on Friday, as some on Wall Street viewed the stock as fairly valued at current levels.

“The quarter was strong but it’s hard to see the catalyst for the next leg higher at the current valuation. COST is very well positioned to continue to take share but … its high multiple (29.0x 2024E EV/EBITDA) and crowded positioning keeps us Neutral on the stock. We view the risk/reward as balanced at current levels,” noted Citi analyst Paul Lejuez in a client note.

Costco’s shares have gained approximately 55% over the past year, outperforming the S&P 500’s 29% increase.

Joe Feldman of Telsey Advisory Group told Yahoo Finance that a pause in the stock’s growth was expected, considering its recent strong performance.

“The stock also has a history of taking a breather when it reports financial news. We are not concerned, given the business remains quite solid, as evidenced by the comp trend,” he added.

Costco’s Second-Quarter Earnings Breakdown

Here’s how Costco’s fiscal second-quarter results compared to Wall Street estimates, according to Bloomberg data:

Net sales: $58.44 billion versus $59.04 billion

Adjusted EPS: $3.92 versus $3.62 expected

Same-store sales growth: 5.8% versus 4.65% expected

US same-store sales growth: 4.8% versus 4.09% expected

Canada same-store sales growth: 9% versus 6.31% expected

Other international same-store sales growth: 8.2% versus 6.17% expected

Other Highlights

U.S. customer traffic at Costco rose by 4.3% in the quarter.

Costco opened its sixth store in China, located in Shenzhen, and plans to open one more in the country by the end of the year as part of its goal to open 30 new locations worldwide.

Costco is expanding into the sushi business, with plans to open two new fully operated sushi offerings following the successful launch of its first sushi operation in Issaquah, Washington. Galanti stated, “The sushi program has proven to be a category where we can be successful in both quality and price, and we’re looking forward to seeing more of that in the future.”

Featured Image: Megapixl

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