Costco's Consistency Continues: Fool by Numbers

• Email
• Share
• Print

On May 31, Costco (Nasdaq: COST) released Q3 2006 earnings for the period ended May 7.

• Sales beat estimates, but earnings missed by a penny because of increased fuel costs and income taxes.
• More importantly, earnings per share grew 14.5%, while the balance sheet remained strong.
• Most of the change in long-term debt is due to a reclassification to short-term debt (due in one year).

(Figures in millions, except per-share data)

Income Statement Highlights

	Avg. Est.	Q3 2006	Q3 2005	Change
Sales	$13,120	$13,273	$11,997	10.6%
Net Profit	--	$236	$210	12.3%
EPS	$0.50	$0.49	$0.43	14.5%
Diluted Shares		481	493	(2.6%)

Get back to basics with a look at the income statement.

Margin Checkup

	Q3 2006	Q3 2005	Change*
Gross Margin	12.34%	12.45%	(0.11)
Operating Margin	2.67%	2.63%	0.04
Net Margin	1.78%	1.75%	0.03

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights*

Assets	Q3 2006	Q3 2005	Change
Cash + ST Invest.	$3,302	$4,051	(18.5%)
Accounts Rec.	N/A*	$298	N/A*
Inventory	$4,416	$4,040	9.3%

Liabilities	Q3 2006	Q3 2005	Change
Accounts Payable	$4,439	$4,134	7.4%
Long-Term Debt	$230	$715	(67.9%)

* Balance sheet data taken from the company's conference call.

Learn the ways of the balance sheet.

Cash Flow Highlights

Not provided by the company. (Boo!)

Find out why Fools always follow the money.

Related Companies:

• Wal-Mart (NYSE: WMT)
• Target (NYSE: TGT)
• BJ's Wholesale (NYSE: BJ)
• Dollar General (NYSE: DG)
• Family Dollar (NYSE: FDO)

Costco and Family Dollar are Motley Fool Stock Advisor selections, while Wal-Mart is a Motley Fool Inside Value selection.

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.

At the time of publication, Nathan Parmelee had positions in Costco. Fool rules are here.