By Jamie Dlugosch, InvestorPlace.com

I've been writing about Costco (COST) quite a bit over the past year. All of my thoughts and views are directly related to the company and its stock price.

I do not opine as to the joy of shopping at Costco or the lack thereof. I care only about results, managerial leadership and operating performance. Ultimately that is all that matters with respect to stock value, not whether or not you like the store.

To that end we received more data with respect to Costco's operating performance with the release of December sales. On the surface the results appeared to be rather pleasing, but a closer look at the numbers raises a few questions.

In the first paragraph of the release the company proudly states that sales for the five weeks ending Jan. 3 grew by 11% as compared with the same five-week period last year.

The report later explains that much of the gain can be attributed to foreign currency exchange gains and gasoline inflation. Excluding those benefits, sales gained a more modest but still respectable 4%.

Shares of COST moved higher in after-market trading on the news. The headline number of 9% was above estimates for a gain of 7.9%.

The euphoria was short-lived with a deeper analysis of the numbers.

There's nothing wrong with a 4% sales gain, but don't get confused by the headline number.
 
As for the stock at the current valuation, shares are still quite expensive and a 4% gain in sales year-over-year is nothing to get excited about. Last year was the heart of a deep recession. The December number should be positive, and it was.

I just don't think the performance justifies a lofty stock valuation. In one of my recent posts, I suggested that Costco would miss current expectations for earnings. I stand by that forecast.

Excluding currency and inflation benefits, COST is left swimming upstream versus a lofty valuation. The stock is over-valued in my opinion, especially considering performance over the last year. Frankly I'm still upset that more could not be done to improve its lot during an opportunistic time.
 
That said, other investors obviously love COST. That's the beauty of the market. We all can have an opinion.

(Forget Costco -- The holiday numbers are in, and many other retailers are smiling. Read "5 Hot Retail Stocks" for the names of the retailers poised to continue performing in 2010.)

At the time of this writing, Jamie Dlugosch did not own shares of COST in personal or client portfolios.

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