Costco: 6 Different Insiders Have Sold Shares This Month

| About: Costco Wholesale (COST)

Summary

Six insiders sold Costco stock within one month.

The stock was not purchased by any insiders in the month of intensive selling.

Three of these six insiders decreased their holdings by more than 10%.

Costco Wholesale Corporation (NASDAQ:COST) is engaged in the operation of membership warehouses in the United States and Puerto Rico, Canada, the United Kingdom, Mexico, Japan, Australia, and through majority-owned subsidiaries in Taiwan and Korea.

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Insider selling during the last 30 days

Here is a table of Costco's insider activity during the last 30 days.

Name Title Trade Date Shares Sold Rule 10b5-1 Current Ownership Decrease In Ownership
Richard Galanti CFO March 14 15,164 No 57,168 shares + 23,000 options 15.9%
James Sinegal Director March 14 4,000 Yes 1,711,462 shares 0.2%
Craig Jelinek CEO March 14 41,444 No 237,228 shares 14.9%
John McKay EVP March 14 3,000 No 65,941 shares 4.4%
Timothy Rose EVP March 12 5,000 No 36,579 shares 12.0%
Franz Lazarus EVP March 3 600 Yes 52,615 shares 1.1%
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There have been 69,208 shares sold by insiders during the last 30 days. James Sinegal and Franz Lazarus sold shares pursuant to a Rule 10b5-1 plan. More details about the Rule 10b5-1 trading plan can be found from this link.

Insider selling by calendar month

Here is a table of Costco's insider activity by calendar month.

Month Insider selling / shares Insider buying / shares
March 2014 69,208 0
February 2014 4,600 0
January 2014 9,255 0
December 2013 20,500 0
November 2013 101,542 0
October 2013 72,342 0
September 2013 8,000 0
August 2013 8,000 0
July 2013 8,000 0
June 2013 13,000 0
May 2013 16,000 0
April 2013 57,830 0
March 2013 10,000 0
February 2013 8,000 0
January 2013 28,000 0
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There have been 442,277 shares sold, and there have been zero shares purchased by insiders since January 2013.

Financials

Costco reported the fiscal 2014 second-quarter, which ended February 16, financial results on March 6 with the following highlights:

Revenue $26.3 billion
Net income $463 million
Cash $6.5 billion
Debt $5.0 billion
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(Source: Earnings presentation)

Costco has a negative EPS growth currently.

Competition

Costco's competitors include Target (NYSE:TGT) and Wal-Mart Stores (NYSE:WMT). Here is a table comparing these companies.

Company COST TGT WMT
Market Cap: 49.92B 37.82B 241.46B
Employees: 103,000 N/A 2,000,000
Qtrly Rev Growth (yoy): 0.06 -0.05 0.01
Revenue: 107.89B 72.60B 476.29B
Gross Margin: 0.13 0.30 0.25
EBITDA: 4.05B 6.45B 35.74B
Operating Margin: 0.03 0.06 0.06
Net Income: 1.96B 1.97B 15.88B
EPS: 4.45 3.07 4.89
P/E: 25.51 19.44 15.24
PEG (5 yr expected): 2.26 1.27 1.68
P/S: 0.46 0.52 0.51
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Costco has the highest P/E ratio among these three companies.

Here is a table of these competitors' insider activities during the last six months.

Company Insider buying / shares Insider selling / shares
TGT 0 14,873
WMT 0 46,573
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Only Costco has seen intensive insider selling during the last 30 days.

Conclusion

There have been six different insiders selling Costco, and there have not been any insiders buying Costco during the last 30 days. Three of these six insiders decreased their holdings by more than 10%. Costco has an insider ownership of 0.60%.

Before going short Costco, I would like to get a bearish confirmation from the Point & Figure chart. The two main reasons for the proposed short entry are relatively high P/E ratio, and the intensive insider-selling activity.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.