Performance Analysis of Costco Wholesale Corporation

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Performance Analysis of Costco Wholesale Corporation xxxx Strayer University FIN 534: Financial Management Professor: xxxx June 11, 2012 Costco Wholesale Corporation Higher interest rates, levels of unemployment, consumer debt levels, and unsettled financial markets are general economic factors that can adversely affect the company’s financial performance. These key elements play an important role in how a company chooses to move forward operationally and financially. Therefore, it’s imperative that we as investors understand a company’s business strategy as well as have a general knowledge of issues which may impact their decisions. Prior to investing, we should review a company’s operations, stock price, and their…show more content…
For example, the 2007-2008 recessions considerably reduced the amount of expendable income for many buyers. Therefore in 2008, Costco’s saw a growth in sales of roughly 12.5%. However, as the economy started to rebound in 2009 their sales reduced. Over the next two years, their sales have continued to increase. Therefore, Costco’s bottom line has fared well since the economic slowdown. The membership warehouse market is highly competitive, based on factors such as price, merchandise quality and selection, and membership service. Currently, Costco’s biggest concern is over expansion and cannibalization of its existing store locations (Wikinvest). This means that Costco will essentially be competing against itself. This led the company to announce it will slow its domestic expansion plans. In turn, they will look to international markets for future growth. Also, their primary competitors are Walmart’s Sam’s Club and BJ’s. All three of this companies share very similar business models which is to sell large volume of merchandise at low prices. Each store also offers similar business segments such as food, apparel, and gas. Stock Price Analysis Costco Wholesale Corporation strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income, revenue growth, and reasonable debt levels – all of which impact stock price performance.

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