Where will Costico will be during the next three years?

Nasdaq: Cost has always been one of the successful investments in the market, as it has a strong business model that makes it one of the most stable companies in the retail sector.

Costtec has gained the loyalty of its customers by offering high -quality products at low prices, as well as a distinctive shopping experience represented in the element of surprise and finding unique deals, as well as attractive offers such as low -price grilled chicken.

The success of Costtec depends on the subscription system, where the membership fees are an essential part of its profits, and the company succeeded in expanding by adding new stores at a time when many retailers have increasingly dependent on e -commerce.

However, Kostcco was able to integrate e -commerce smoothly into its business model, but with the share price ratio to the high profits of up to 52, and the question remains where the stock will be after three years?

A look at the future of Costico

Despite the weak confidence of consumers and inflation, Coststo is still achieving strong growth in similar sales. In the second financial quarter ending in February, similar sales have increased with the exception of fuel and currency effects by 9.1%, which reflects the continued strong demand for its products, and e -commerce sales grew by 22.2%, which is an indication of the increasing interest of customers in buying online.

Costo’s growth also depends on geographical expansion, as it ended the second quarter with 897 stores around the world, after adding 29 new stores during the past year, which means an increase of 3% in the number of branches, and if the growth of the same growth continues, it is expected that Costtec will add 93 additional stores during the next three years, bringing the total number to 990 stores, which means a total increase of 10% in the number of stores.

If Coststo’s sales continue to grow by 5% to 10% annually, it is expected that its total sales will increase by between 26% and 43% during the next three years, which may raise its revenues to between 326.5 billion dollars and 370.5 billion dollars.

But sales are not the only source of revenue, as membership fees also contribute to a sustainable income. In 2024, membership revenues amounted to $ 4.8 billion, and with the company raising basic subscription fees to $ 65, this will lead to a direct increase in revenues during the current fiscal year.

Costtec’s memberships have witnessed an annual growth by 7% during the past two years, and if it continues at this rate, it is expected to increase by 23% during the next three years, which will raise membership revenues to 6.33 billion dollars, i.e. an increase of 32%, and this is very important because most of the subscription revenues turn directly to net profits, which supports profit margins.

What will happen for profits?

Costtec maintains a low profit margin to attract more members and encourage them to spend in its stores, but it is expected that its operating income from sales will grow by 35% to reach $ 6 billion.

When adding membership revenues to the equation, operating income will reach 12.3 billion dollars, i.e. an increase of 33% over 2024, and if the costs of benefits and taxes remain fixed, the growth growth for each share will be almost the same percentage, as the number of existing shares has not changed significantly during the past three years.

Is the arrow a good investment?

In the current evaluation, investors appear to be ahead of the arrow based on higher growth expectations than expected, but because Costtec is a stable and capable of facing economic crises, it is possible that it will maintain its high value in the market.

In addition, Costtec has a date of distribution of private profits, as it paid $ 15 per share in December 2023, and it is likely that it takes several years before providing other special profits distributions.