Sturdy Comps Performance to Aid Costco's (COST) Q1 Earnings
Costco Wholesale Corporation COST is slated to report first-quarter fiscal 2018 results on Dec 14. In the preceding quarter, the company outperformed the Zacks Consensus Estimate by 3%. Let’s see how things are shaping up prior to this announcement.
Investors are keeping their fingers crossed and hoping for a positive earnings surprise from Costco in the quarter to be reported. The current Zacks Consensus Estimate for the quarter under review is $1.35, reflecting a year-over-year increase of more than 15%. We observe that the Zacks Consensus Estimate has increased by 3 cents in the past 30 days. Analysts polled by Zacks expect revenues of $31,286 million, up 11% from the year-ago quarter.
Model Predicts Higher Probability
Our proven model shows that Costco is likely to beat estimates this quarter. This is because a stock needs to have both — a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Costco has an Earnings ESP of +1.64% and carries a Zacks Rank #3. This makes us reasonably confident that the bottom line is likely to outperform estimates.
Costco Wholesale Corporation Price, Consensus and EPS Surprise
Costco Wholesale Corporation Price, Consensus and EPS Surprise | Costco Wholesale Corporation Quote
Factors at Play
We believe that Costco continues to be one of the dominant retail wholesalers based on the breadth and quality of merchandise offered. The company’s strategy to sell products at heavily discounted prices has helped it to remain on growth track as cash-strapped customers continue to reckon Costco as a viable option for low-cost necessities. However, stiff competition and cautious consumer spending remain causes of concern.
Nevertheless, the hike in annual membership fees in the recent past and increased penetration of Citi Visa co-brand card program will benefit the stock. We are also encouraged by Costco’s expansion strategy, as it remains committed to opening new clubs and expanding e-commerce capabilities. It is also gradually expanding e-commerce capabilities in the United States, Canada, UK, Mexico, Korea and Taiwan.
For the 12-week period ended on Nov 26, 2017, Costco reported 10.5% jump in comps, displaying an increase of 10.3%, 11.3% and 10.1% at the United States, Canada and Other International locations. Net sales for the period came in at $31.13 billion, an increase of 13.3% from the year-ago period. Comparable e-commerce sales for the period under review surged 43.6%.
3 Stocks with High Probability to Beat Estimate
Here are three other stocks you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat:
NIKE, Inc. NKE has an Earnings ESP of +5.49% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
McDonald's Corporation MCD has an Earnings ESP of +0.22% and a Zacks Rank #3.
Buffalo Wild Wings, Inc. BWLD has an Earnings ESP of +7.16% and a Zacks Rank #3.
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