Stocks quoted in this article:
Costco (COST - 32-3/4) is the largest operator of wholesale clubs in the United States, surpassing Wal-Mart's (WMT) Sam's Club chain. In Wednesday's trading, the shares have plunged more than 20 percent on extremely heavy volume to reach a new 52-week low at 25-15/16. This decline followed a report that COST's fourth-quarter earnings announcement will likely miss analysts' estimates by one to two cents per share. Additionally, the firm said its earnings will rise 11-to-13 percent over the next year, compared to the 16-percent originally predicted. COST officials cited rising wages, continued store expansion, and other fundamental issues as the reason for this downfall. This will mark the first time the retailer has fallen short of analysts' expectations since 1995. In response, a number of brokerage houses downgraded the stock, including Morgan Stanley, Merrill Lynch, and Goldman Sachs. On the options front, nearly 3,100 contracts have changed hands on the June 40 call. Prior to today, this strike was home to only 109 contracts.