The warehouse retailer posted better-than-expected results in its second-quarter earnings report and got some bullish analyst notes over the course of the month. During a month when investors were hit by concerns over rising interest rates, inflation, the war in Ukraine, and high oil prices, Costco also seemed to benefit from its status as a stable, recession-proof retailer.
The following chart shows how the stock gained over the course of the month.
Costco delivered another strong second-quarter earnings report in early March with comparable sales up 11.1%, excluding gasoline and foreign exchange. E-commerce sales were up 12.6%, lapping a boom in the quarter a year ago.
Revenue rose 15.9% to $51.9 billion, beating estimates at $51.5 billion, and earnings per share rose from $2.14 to $2.92 as it lapped a quarter in which it paid out a premium pandemic wage, helping to lift its earnings. That figure topped expectations at $2.74.
The third quarter also looks off to a strong start as well with comparable sales up 10.6% through the first four weeks. The stock actually pulled back on the report, falling 1.4% as stocks fell broadly that day, March 4.
A pair of analysts raised their price targets on the news with BMO Capital's Kelly Bania citing strong member growth, the Q2 earnings beat
The stock started to ramp higher on March 15 as the broad market bounced back on lower oil prices, and it jumped again the next day after the Federal Reserve said it would raise its benchmark rate by a quarter of a percentage point. The Fed also said it expects to raise rates seven times this year to help bring inflation under control.
Costco closed the month out on a positive note as another analyst raised their price target on the stock.
In an environment with high inflation, high interest rates and fears of a recession, Costco looks poised to win and pick up market share. The retailer's membership model helps lock in its customers and Costco's customer base also tends to be higher-income than its peers, meaning that can better absorb a recession. Finally, the company's reputation for rock-bottom prices should also help it win business during a difficult economic time.
As its February comparable sales shows, business remains brisk at Costco despite concerns about the broader economy.