Insiders Sell, Institutions Buy Costco In 2021
If you are wondering if the insiders have been selling Costco (NASDAQ: COST) the answer is yes. Insiders have made 15 transactions over the past 12 months, all sales, totaling $17.7 million on proceeds. If you are wondering if these sales are having a negative impact on price action the answer is no. While the sales are worth noting, the net amount is less than 0.01% of the market cap and there are other factors to consider as well.
To begin, the selling is broad-based among a number of VPS and execs with only one repeat seller. The sales are in tandem with rising share prices and associated with share-based compensation so nothing is really out of the ordinary. More importantly, insiders own less than 0.25% of shares which gives them very little power in regards to supply and demand dynamics.
The institutions are another story altogether. While there have been some noteworthy insider selling over the past year, Insidertrades.com reveals the institutions are net buyers to the tune of roughly $5 billion. That’s worth a more substantial 2% of the company and more than offsets any insider selling that has occurred. In total, the institutions control nearly 67% of the shares and their holdings are growing.
Costco Has Another Better Than Expected Quarter
Costco shares are edging higher in the wake of the fiscal Q1 earnings report, a report that spans the calendar Q3 and Q4 periods of 2021. The company reported $50.36 billion in net revenue which is good for a gain of 16.5% over last year and beat the consensus by 120 basis points. The revenue is up a more substantial 36% in the two-year stack with growth underpinned by expansion, organic growth, and higher pricing. On a comp basis, YOY comps are running 9.8% higher systemwide with a 9.9% gain in the U.S. offset by an 8.3% increase in Canada and boosted by a 10.9% increase in international markets. eCommerce, a key driver of growth, is up 13.3% versus last year’s double-digit gains.
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Moving down the report, the margin news is a bit mixed. Expansion at the gross level was offset shrinkage at the operating level to leave EPS ahead of the consensus. The GAAP $2.98 beat by $0.33 while the adjusted $2.77 beat by a narrower $0.12 margin. The company did not give any guidance but, based on the obvious strength of the business, we are expecting to see growth continue in the coming quarters.
What Do The Analysts Say About Costco
The analysts are bullish on Costco and pushing the consensus price target higher. The company has 24 current ratings including 3 relatively fresh ones that amount to a Strong Buy. The consensus price target of $530, however, is lagging price action and suggest the stock is fairly valued at these levels. The more recent activity is different, though, and includes 7 reiterated Buy or Strong Buy ratings and 7 price target increases. The consensus of these 7 is closer to $560 which implies about 3.5% upside and this includes the high price target as well. The new high price target is $610 and compounded by two $600 targets that assume a more robust 12% of upside for the stock.
The Technical Outlook: Costco Confirms Trend
Shares of Costco hit a peak recently and pulled back to test support at the short-term moving average. Support is confirmed at the short-term EMA and price action is now bouncing higher. There may be some resistance at the $547 and $560 levels but we expect it to break down quickly. A move above $560 would be bullish and likely lead the stock up another $40 to $100 over the next quarter or so. If the stock cannot make a new high, however, range-bound trading may set in.
Companies in This Article:
| Company | Current Price | Price Change | Dividend Yield | P/E Ratio | Consensus Rating | Consensus Price Target |
|---|
| Costco Wholesale (COST) | $964.01 | +0.9% | 0.48% | 58.18 | Moderate Buy | $908.81 |
Experience
Thomas Hughes has been a contributing writer for InsiderTrades.com since 2019.
Areas of Expertise
Technical analysis, the S&P 500; retail, consumer, consumer staples, dividends, high-yield, small caps, technology, economic data, oil, cryptocurrencies
Education
Associate of Arts in Culinary Technology
Past Experience
Market watcher, trader and investor for numerous websites. Founded Passive Market Intelligence LLC to provide market research insights.
