Insider Buying

Insider Buying Report: Costco Wholesale Corporation (COST:US)

During the evening, several consumers queue both inside and outside the Costco Wholesale Store.
Costco Wholesale Corporation
(COST:US)
12 months:
+51%
Activity:
Bullish
Pattern:
Large purchase from board member
News:
Good Q3 results
Costco Wholesale Corporation
(COST:US)
12 months:
+51%
Activity:
Bullish
Pattern:
Large purchase from board member
News:
Good Q3 results

Insider buying can provide clues about a stock’s next move. Insiders sell company stock for a number of reasons. Yet they only buy stock for one reason – they expect it to rise.

In this report, we are going to highlight a large insider purchase at Costco Wholesale Corporation (COST:US). Costco is a retailer that operates an international chain of warehouses that carry brand-name merchandise at substantially lower prices than are typically found at conventional wholesale or retail sources. These warehouses are designed to help small- and medium-sized businesses reduce costs in purchasing for resale and for everyday business use. The company is listed on the NASDAQ Global Select Market and currently has a market capitalization of $244 billion.

Costco Wholesale Corp: Insider Buying

Our data shows that on December 21, board member Mary Wilderotter bought 925 COST shares at a price of $540.13 per share. This trade cost the insider $499,620 and increased her holding to 10,445 shares.

Costco Wholesale Corporation's price chart, emphasizing key purchase and sell occurrence.

Largest Insider Purchase Since 2019

This trade is worth highlighting for a couple of reasons.

Firstly, it’s large in size. Our data shows that it represents the largest buy from an insider at Costco since April 2019. The size of the trade suggests that Ms. Wilderotter is confident the stock is set to move higher.

Secondly, Ms. Wilderotter has purchased shares near the stock’s all-time high price. This suggests the insider believes the market is underestimating future growth here.

Strong Q3 Results

Costco’s recent first quarter fiscal 2022 results beat expectations.

For the period, total revenue came in at $50.36 billion, up 16.6% year on year, and above the consensus estimate of $49.60 billion. Meanwhile, the company posted adjusted earnings per share of $2.98, well above the consensus forecast of $2.64 per share. Earnings were boosted by the resumption of social events, which has led to higher sales of high-margin items such as jewelry and apparel.

Since these results, a number of brokers have raised their price targets for the stock. For example, Morgan Stanley has lifted its price target to $560 from $510. Meanwhile, JP Morgan has raised its target price to $560 from $535.

In light of these developments, we see the insider buying here as a bullish indicator.

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