Costco Wholesale Corporation Just Silenced the Doubters

Two months ago, Costco Wholesale (NASDAQ: COST) stock crashed after the company released its fourth-quarter earnings report. Earnings per share came in $0.06 above the average analyst estimate, but investors were concerned about a downtick in member retention. Many also felt that Costco didn't have a coherent strategy for competing with e-commerce juggernaut Amazon.com (NASDAQ: AMZN).

Costco's recent sales results suggest that these worries were overblown. The company continues to enjoy a deep moat -- even with respect to Amazon -- due to its rock-bottom operating costs and massive buying power. This should keep it popular with consumers for decades to come.

During 2016, Costco Wholesale reported relatively slow comp sales growth (at least by Costco standards) of 1%-4% for most months. (All comp sales results in this article exclude the impact of gasoline price and foreign currency fluctuations.) Deflation across numerous product categories was a key driver of this slowdown, offsetting continued increases in customer traffic.

Source: Fool.com