In a consumer-crunching economic climate, Costco (Nasdaq: COST ) has proven itself a prime example of a retailer that can actually flourish. Its latest quarterly results indicate that Costco isn't losing momentum as a mighty contender for the ever-more-stretched consumer dollar.
Costco's third-quarter net income increased 31.7% to $295.1 million, or $0.67 per share. Total revenue increased 13% to $16.6 billion, with same-store sales up 8%. (However, bear in mind that high gasoline prices pushed the comps up -- excluding gasoline, same-store sales increased a still-significant 4%.)
The media's linking the warehouse retailer's results with Big Lots (Nasdaq: BIG ) today, emphasizing both retailers' focus on enticing shoppers with low prices. Of course, dig a week or two back, and you'll recall that Wal-Mart (NYSE: WMT ) also reported an excellent quarter.
Costco and Wal-Mart may be big winners, but Sears Holdings (Nasdaq: SHLD ) and Target (NYSE: TGT ) both suggest that discounts don't guarantee success. Sears Holdings reported a surprising stinker of a quarter compared to Costco -- no great surprise to me -- and Target hasn't exactly been shining lately, either. (I still think Target looks like a bargain right now.)
Nonetheless, Costco seems to be the discounter to beat. In early May, I suggested Costco as a great stock for Mom, even its current trailing price-to-earnings ratio of 27 isn't exactly cheap. But since this Motley Fool Stock Advisor pick has been firing on all cylinders, it's hard to deny its greatness as a company or a stock. (That said, I do wish Costco included more than just its income statement in its press release.)
It might be nice to grab shares of Costco on short-term pullback. But even at its current price levels, I still believe Costco's a fine addition to any long-term portfolio. It's a quality company that can perform in good times and bad. As long as consumers are ultra-concerned with stretching their dollars, Costco's going to deliver.
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