The stock market continued to respond to the latest happenings around the world, with the Russian invasion of Ukraine creating the most uncertainty. With no apparent end in sight to fighting, futures on the Nasdaq Composite (^IXIC 2.18%) were down almost 1% to 13,907 in premarket trading as of 7:30 a.m. ET on Friday.
Investors also paid close attention to the latest financial reports from a couple of major companies in the market. Costco Wholesale (COST 1.03%) reported results that shed more light into the current state of the consumer economy, while tech giant Broadcom (AVGO 3.96%) had things to say about the ongoing efforts across the business world to embrace digital transformation. Together, the two companies painted an interesting picture of where things stand right now.
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Happy holidays for Costco
Shares of Costco Wholesale were down about 2% in premarket trading on Friday. The warehouse retailer's numbers for its fiscal second quarter were exceptionally strong, showing an ongoing bounce from the disruptions from the COVID-19 pandemic the previous year.
Revenue at Costco was higher by 16% year over year to $50.94 billion, as sales for the first 24 weeks of the fiscal year topped the $100 billion mark. Comparable sales were up 14.4%, including a 15.8% rise for its U.S. stores. Rising gasoline prices had a major impact on that number, but even taking fuel out, adjusted comps were higher by 11.1% companywide and 11.3% in the U.S. market.
Costco continued to see strength in its e-commerce channel, showing how the big box retailer has responded to the necessity of having an online presence in light of competition from internet retail companies. E-commerce comps were higher by 12.6% on an adjusted basis during the quarter.
Net income was substantially higher, rising 37% to $1.3 billion. The resulting earnings of $2.92 per share were solidly higher than the year-ago $2.14 per share.
The modest decline in the stock, however, seemed to reflect the same extremely high expectations for growth that have proven to be problematic for a host of stocks during the current earnings season. From a longer-term perspective, Costco seems very much on track to maintain its stable and reliable growth trajectory for years to come.
Broadcom moves broadly higher
Shares of Broadcom moved the other direction in premarket trading Friday morning. The semiconductor chipmaker's stock moved higher by more than 3% following its fiscal first-quarter financial report.
Broadcom's quarterly numbers showed the ongoing strength of the semiconductor industry. Revenue climbed 16% year over year to $7.71 billion. Adjusted net income surged an even healthier 26% to $3.74 billion, and that produced adjusted earnings of $8.39 per share, topping what most investors had expected to see from the chipmaker.
CEO Hock Tan cited familiar factors for the gains. Strong demand from enterprise customers seeking digital transformation played a key role, as did continuing investment from tech service providers seeking to offer cutting-edge technology to their own clients.
Best of all, shareholders got a boost both from shareholder-friendly announcements on capital and from guidance for the coming quarter. With $3.4 billion in free cash flow during the quarter, Broadcom successfully returned $4.5 billion to shareholders through a combination of a dividend yield approaching 3% and a substantial stock buyback. Broadcom expects fiscal second-quarter revenue to rise to $7.9 billion, maintaining an upward trajectory for its business.
Semiconductor shortages and other supply chain factors have produced a strong cyclical surge for the industry. Broadcom hopes to keep taking advantage of that, and investors have high hopes that it will be successful in its efforts.
