Why Investors Should Not Expect a Significant Pullback in Costco Stock Anytime Soon
Costco Wholesale (NASDAQ: COST) has emerged as one of the most successful and admired retail companies. Its approach of selling high-quality goods in bulk at discounted prices continues to draw increasing sales, new warehouse openings, and membership renewals.
This success has come with one unfortunate consequence for those who do not hold shares in the retail stock: an expensive valuation. With its price-to-earnings ratio at 52, its success may not quite justify its stock price. Unfortunately, investors looking for a pullback to buy are unlikely to get that discounted price.
Costco drives the majority of its profits from membership revenue. It usually sells its goods for little more than the cost of goods sold and overhead expenses, meaning it makes very little money from individual sales.
Source Fool.com