The stock market was largely flat on Friday, taking a rest after a hectic week. The Nasdaq Composite (NASDAQINDEX: ^ IXIC) was slightly lower shortly after noon EDT, but had rebounded significantly from larger losses earlier in the session.
The American consumer plays a key role in the development of the American economy. Today, investors in Wholesale Costco (NASDAQ: COT) reacted positively to the latest results from the warehouse retail giant. Meanwhile, in the field of catering, Chuy’s holdings (NASDAQ: CHUY) has made solid gains in its share price. Below, we’ll take a closer look at both stocks to see what’s going on and what the future may hold for us.
Costco reaches historic highs
Shares of Costco Wholesale rose nearly 3% early Friday afternoon. The big box retailer’s fiscal financial performance in the fourth quarter pushed the inventory up to just below record levels.
Costco’s numbers reflected the brand’s dominance by warehouse retail chain orders. Revenue increased 17.5% for the quarter and 17.7% for the full year compared to the prior year periods, with total sales for fiscal 2021 exceeding $ 192 billion.
Comparable sales were extremely strong, with gains of 15.5% overall and 9.4% after taking into account the rise in gasoline prices since last year. US stores performed best in terms of US dollars, although Canada and other international locations had strong performance in local currency.
Costco’s bottom line was also strong. For the full year, net income topped $ 5 billion, up 25% from $ 4 billion in fiscal 2020.
In general, investors are happy with the way Costco has handled difficult situations. The reimposition of purchase limits on paper towels and bottled water signals uncertainty as to when the COVID-19 pandemic will truly be under control. However, the retailer hopes to keep prices attractive while maintaining margins given rising costs, and that’s good news for shareholders.
Hungry for more
Meanwhile, shares of Chuy’s Holdings rose nearly 6%. The Austin-based Tex-Mex restaurant chain has received favorable reviews from stock analysts.
Jefferies (NYSE: JEF) weighed on Chuy’s, shifting the stock from conservation to purchase. Analysts have raised their price target for the Chuy share from $ 5 to $ 41 per share.
The upgrade was part of a larger set of positive reviews directed at several key players in the restaurant industry, with BJ restaurants (NASDAQ: BJRI), Dave & Buster’s (NASDAQ: PLAY), and Cheesecake Factory (NASDAQ: CAKE) also get upgrades. Jefferies is convinced that concerns about cost inflation and the potential impact of the delta variant of COVID-19 have led to an overreaction by selling restaurant stocks. In the long run, analysts believe Chuy’s and its peers should be able to rebound, as strong demand from dining room customers remains largely suppressed.
Chuy took a hard hit early in the pandemic, but investors have long awaited a big bounce from the Tex-Mex chain. From a fundamental point of view, Chuy’s business has yet to regain a path of sustainable growth. However, forward-looking shareholders are increasingly hoping that the worst is now behind Chuy’s, and that it can take advantage of hungry customers to restore pre-pandemic growth.
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