Costco (COST) Q1 Earnings: What's in Store for the Stock?

Costco Wholesale Corporation COST is slated to report first-quarter fiscal 2017 results on Dec 7. The question lingering in investors’ mind is, whether the company will be able to deliver a positive earnings surprise in the quarter to be reported. In the final quarter of fiscal 2016, the company outperformed the Zacks Consensus Estimate by 2.3%. Let’s see how things are shaping up prior to this announcement.

Zacks Model Shows Unlikely Earnings Beat

Our proven model does not conclusively show that Costco is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) 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 -1.67% as the Most Accurate estimate stands at $1.18, while the Zacks Consensus Estimate is pegged higher at $1.20. Costco’s Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.

COSTCO WHOLE CP Price, Consensus and EPS Surprise

 

COSTCO WHOLE CP Price, Consensus and EPS Surprise | COSTCO WHOLE CP Quote

Factors Influencing this Quarter

Costco continues to be one of the dominant retail wholesalers based on its scale and quality of merchandise offered. A differentiated product range enables the company to ensure an upscale shopping experience for its members, resulting in market share gains. Moreover, Costco continues to maintain a healthy membership renewal rate. Further, it is gradually expanding its eCommerce capabilities in the U.S., Canada, UK, Mexico, Taiwan and Korea.

However, investors are worried about Costco’s top-line performance as its revenues have missed the Zacks Consensus Estimate in the seven trailing quarters. Moreover, we note that while lower gasoline prices are adversely impacting U.S. comps, currency fluctuations are affecting international comps. Consequently, shares of Costco have declined 6.1% so far in the year, while the Zacks Categorized Retail-Wholesale industry improved approximately 2.7%.

Stocks Poised to Beat Earnings Estimates

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Burlington Stores, Inc. BURL has an Earnings ESP of +0.59% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

DSW Inc. DSW has an Earnings ESP of +6.25% and a Zacks Rank #3.

Dollar Tree, Inc. DLTR has an Earnings ESP of +0.76% and a Zacks Rank #3.

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