Costco Earnings: An Early Look

Earnings season is winding down, with most companies already having reported their quarterly results. But there are still some companies left to report, and Costco (NASDAQ: COST  ) is about to release its quarterly earnings. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Costco needs no introduction, with its wholesale warehouse business having revolutionized big-box retail. But how did the company do in the all-important holiday season? Let's take an early look at what's been happening with Costco over the past quarter and what we're likely to see in its quarterly report on Tuesday.

Stats on Costco

Analyst EPS Estimate

$1.06

Change From Year-Ago EPS

18%

Revenue Estimate

$25.13 billion

Change From Year-Ago Revenue

9.4%

Earnings Beats in Past 4 Quarters

4

Source: Yahoo! Finance.

Will Costco bring home profits this quarter?
Analysts have been mostly stable in their views on Costco's earnings in the past few months, cutting the just-ended quarter's call by a penny per share but raising full fiscal-year 2013 consensus by the same penny. The stock is up a modest 5% since early December.

Costco is the closest thing to a co-op that you'll probably ever see from a private company. The warehouse retailer sells its goods at razor-thin margins even by retail standards, making the bulk of its money from the annual membership fees that it charges. With the company having maintained an 86% membership renewal rate even after raising its fees by 10%, Costco clearly has strong customer loyalty.

Recently, Costco has been having great success even in a difficult economic environment. Same-store sales in February came in at 6%, outpacing analysts' calls even as gas prices rose, tax refunds were delayed, and the payroll-tax holiday took full effect. By contrast, both Wal-Mart (NYSE: WMT  ) and Target (NYSE: TGT  ) have had struggles with sales, with the now-infamous internal emails from Wal-Mart complaining about customers' absence.

Yet Costco hasn't gone without problems. On Valentine's Day, Tiffany (NYSE: TIF  ) accused the wholesaler of selling counterfeit Tiffany diamond rings. Even though Costco had stopped selling the rings already after Tiffany's initial complaint, the jeweler decided to move ahead with the suit, which seeks $2 million plus triple damages for any profit Costco made from selling the rings.

Tiffany aside, Costco merely needs to keep up the string of good news going in its quarterly report to make investors happy. So far, the company has done an excellent job of navigating changing retail trends, and it shows no signs of stopping anytime soon.

Costco's stock performance has been nothing short of amazing. But even with things going so well for the company, could the ride be nearly over for Costco investors? To answer that and more, we've compiled a premium research report with in-depth analysis on Costco. Simply click here now to gain instant access to this valuable investor's resource.

Click here to add Costco to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

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.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2303356, ~/Articles/ArticleHandler.aspx, 8/22/2014 4:12:52 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement