Costco Beats on Both Top and Bottom Lines

Costco (Nasdaq: COST  ) reported earnings on Oct. 10. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Sep. 2 (Q4), Costco beat slightly on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue increased and GAAP earnings per share grew significantly.

Gross margins were steady, operating margins grew, net margins grew.

Revenue details
Costco reported revenue of $32.22 billion. The 18 analysts polled by S&P Capital IQ expected to see net sales of $31.71 billion on the same basis. GAAP reported sales were 14% higher than the prior-year quarter's $28.18 billion.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $1.39. The 26 earnings estimates compiled by S&P Capital IQ anticipated $1.31 per share. GAAP EPS of $1.39 for Q4 were 29% higher than the prior-year quarter's $1.08 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 12.4%, about the same as the prior-year quarter. Operating margin was 2.9%, 20 basis points better than the prior-year quarter. Net margin was 1.9%, 20 basis points better than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $23.19 billion. On the bottom line, the average EPS estimate is $0.92.

Next year's average estimate for revenue is $105.11 billion. The average EPS estimate is $4.46.

Investor sentiment
The stock has a five-star rating (out of five) at Motley Fool CAPS, with 4,377 members out of 4,531 rating the stock outperform, and 154 members rating it underperform. Among 1,245 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 1,221 give Costco a green thumbs-up, and 24 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Costco is outperform, with an average price target of $93.18.

If you're interested in retailers like Costco as investments, you should check out the retail concept that is The Motley Fool's top stock for 2012. Its founder wrote the book on big box retailing, and it's growing in increasingly important international markets. Click here for instant access to this free report.

Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool owns shares of Costco Wholesale. Motley Fool newsletter services recommend Costco Wholesale. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 10, 2012, at 2:12 PM, cmrk3 wrote:

    Why is the 4th quarter average estimate and EPS less than the 3rd quarter?

    3rd Quarter:

    32.22B, expected 31.71B

    4th Quarter:

    expected 23.19B (which is billions less!?)

  • Report this Comment On October 10, 2012, at 3:26 PM, DoctorLewis4 wrote:

    Went to Costco today and saved 40 cents per gallon on gas. (California) What a novel concept - a company that actually cares about it's customers. Well done on earnings as well.

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