Accor Benefiting from Improved Guidance and Cost Savings
"And meanwhile, AOR shares gaining after the hotel year's guidance was increased. Yeah, RA's guidance this morning essentially on the back of cost savings. They've been simplifying a lot of their portfolio. There was also a host of other positive news alongside their earnings. So, they issued a new buyback that's 100 million euros for the fourth quarter. They also might list their lifestyle brands portfolio that has been touted before, but they've confirmed that this morning. And this was all with their third quarter earnings, coming in line with estimates with quite positive comments about their current trading."
The segment on Accor focuses on a series of positive catalysts including increased guidance, cost savings, and a new 100 million euro buyback initiative. Despite potential weaknesses in some markets, the overall message is upbeat as shares have risen, indicating improved investor sentiment for the hotel portfolio.
Nestle: Mixed Sentiment Amid Cost-Cutting Initiative
"So Nestle actually had two good news for investors today. So first, it reported stronger than expected sales growth on on the back of both price and volume increases, which is quite positive given that it really has struggled to revive volumes over the last few months. And then the other big thing, which is the thing that you just mentioned, which is that plan to cut 16,000 jobs over the next couple of years. Its a really bold start for the new CEO, Philip Novatil, helping to restore investors trust in Nestle, although the outlook remains quite fragile."
The speaker outlines Nestles recent positive sales growth and a major cost-cutting move by cutting 16,000 jobs, which is intended to restore investor confidence under a new CEO despite underlying fragility.
Company Commentary on Costco's Expanding PE Multiple
"I did some research over the weekend. Um, and the PE of Costco going back to the start of the 21st century was around 20. Then it just exploded higher, got as high as 60 earlier in the year. I think it's not solely because Costco is suddenly massively more profitable; rather, it’s a combination of modest margin tailwinds, emphasis on modest growth in e-commerce and international scale, the strength and stability of the membership model, a premium multiple for perceived defensive qualities, and investor rerating dynamics."
The speaker provides detailed commentary on Costco's valuation, noting that its PE ratio has expanded from around 20 to as high as 60. The commentary stresses that this increase isn’t driven by a marked improvement in profitability, but by various qualitative factors such as margin tailwinds, e-commerce growth, and a stable membership model. This adds investor color to the stock without making a direct trade call.
Costco Valuation Concerns Amid Strong Fundamentals
"Costco – I wrote about Costco negatively for Barr\'s late in 2024. And the argument there was that it\'s a great company, very well run, but you\'re paying over 50 times earnings. The stock has pulled back somewhat. It\'s still probably trading for 45 or 50 times earnings. It\'s very well run... the stock is actually getting closer to a 52-week low, so getting more interesting."
Although Costco is a well-run business with an unbeatable value proposition for its customers, the high valuation (around 45-50x earnings) raises concerns. A further pullback toward its 52-week low could provide a better buying opportunity.
Trade Call: Avoid New Buys in Costco Due to Elevated Valuation
"I've held Costco for years... but I'm not buying it today because of the higher PE ratio. I bought it at a trailing PE of 40 and now it's at 55."
The host outlines his personal trading decision regarding Costco. Despite holding a profitable position from a previous purchase, he advises against initiating new buys at current levels because Costco's valuation has significantly increased (from a trailing PE of 40 to 55), making it less attractive for additional entry.
Mixed Reaction to Costco Quarterly Profit
"We saw the company reported quarterly profit that was better than expectations, but it seems as though people are kind of viewing the report as overall very mixed. I mean, Truist is saying that while they are leading to a lot of the exclusive shopping hours and Instacart credit are leading toward a significant number of trade-ups, Costco's valuation makes it challenging to put fresh money to work."
Costco (COST) experienced a roughly 4.1% decline despite posting quarterly profits above expectations. The market reaction appears mixed, mainly due to concerns over the stock's high valuation, making it less attractive for new money.
Costco's Resilient Performance Despite Slight Price Dip
"Costco reporting earnings after the bell today. Their earnings did beat expectations. They're really citing steady consumer demand."
Costco reported earnings that beat expectations, backed by robust consumer demand despite a minor dip in share price around 0.2% at the close. The commentary emphasizes the retailer's strong operational model and long-standing reputation for bulk sales, suggesting a resilient business model in uncertain economic times.
Costco Valuation and Growth Concerns
"Costco, which reports on Thursday, you look at the stock price, there\'s almost no optimism built in. It\'s up only 3% over the past three months and 4% over the past year. The optimism is in the valuation for Costco. That\'s trading at around, I guess it\'s 41.5 times earnings. And this is for a company that isn\'t a super fast grower, but it\'s a very consistent grower with a moat that is kind of unpenetrable. The risk here is that it does get hard for the company to keep beating the numbers the way that people want it to."
The discussion on Costco centers on its high valuation and modest stock performance relative to consumer participation. While the company exhibits stable and consistent growth supported by its membership model, concerns exist regarding its capacity to sustain accelerating growth and justify the premium earnings multiple, suggesting cautious sentiment.
Company Commentary on Costco7s Consistent Performance
"Costco earnings are out next Thursday. Shares are up 180% over the last five years. Last quarter, the US and Canada renewal rate was 92.7% and worldwide rate came in at 90.2%. That is just consistent. It tells you why this is such a good business."
Speaker 04 highlights Costco (ticker COST) as a steady and fundamentally strong business with impressive membership renewal rates and consistent earnings growth. While the company may be considered a "boring" business, its resilient performance makes it attractive for long-term investors.