Yahoo Finance Costco (COST) Q3 Earnings Coming Up: Factors to Consider
Costco Wholesale Corporation COST is likely to register an increase in the top line when it reports third-quarter fiscal 2023 results on May 25 after the closing bell. The Zacks Consensus Estimate for revenues is pegged at $54.57 billion, indicating growth of 3.8% from the prior-year reported figure.
The bottom line of this Issaquah, WA-based company is anticipated to have improved year over year. Although the Zacks Consensus Estimate for third-quarter earnings per share has declined 1.2% to $3.32 over the past 30 days, the figure still suggests an increase of 4.7% from the year-ago period.
Costco has a trailing four-quarter earnings surprise of 2.4%, on average. In the last reported quarter, the company’s bottom line outperformed the Zacks Consensus Estimate by 3.1%.
Key Factors to Note
Costco’s growth strategies, better price management, decent membership trends and the increasing penetration of the e-commerce business have been contributing to its performance. The company’s strategy to sell products at discounted prices has helped attract customers who have been seeking both value and convenience.
The abovementioned factors have been aiding this operator of membership warehouses in registering a decent sales run. We estimate a 2.4% jump in net sales and a 6.5% rise in total membership fees for the quarter under discussion. No wonder, the company’s total paid members have been rising. Its growing customer base and high renewal rates have been fueling sales. We expect a 1.5% jump in comparable sales for the third quarter.
Costco Wholesale Corporation Price, Consensus and EPS Surprise
Costco Wholesale Corporation price-consensus-eps-surprise-chart | Costco Wholesale Corporation Quote
However, our estimate suggests a sharp deceleration in the comparable sales growth rate on a sequential basis. This is because inflation and a high-interest rate environment have discomforted the family budget, compelling consumers to pull back on spending. We note that the metric had risen 5.2% in the second quarter.
Further, margins also remain an area to watch. Any deleverage in the SG&A rate, higher labor and occupancy costs, and increased marketing and other store-related expenses might have weighed on margins.
What the Zacks Model Unveils
Our proven model predicts an earnings beat for Costco this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat, which is the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.
Costco has a Zacks Rank #3 and an Earnings ESP of +0.04%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Other Stocks With the Favorable Combination
Here are three other companies you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat:
American Eagle Outfitters AEO currently has an Earnings ESP of +9.81% and a Zacks Rank #3. The company is likely to register a bottom-line increase when it reports first-quarter fiscal 2023 numbers. The Zacks Consensus Estimate for the quarterly earnings per share of 17 cents suggests an increase of 6.3% from the year-ago quarter.
American Eagle Outfitters’ top line is expected to increase year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $1.06 billion, which indicates a marginal increase of 0.9% from the figure reported in the prior-year quarter. American Eagle Outfitters has a trailing four-quarter earnings surprise of 0.9%, on average.
Ulta Beauty ULTA currently has an Earnings ESP of +0.66% and a Zacks Rank of #3. The company is likely to register an increase in the bottom line when it reports first-quarter fiscal 2023 results. The Zacks Consensus Estimate for the quarterly earnings per share of $6.81 suggests an increase of 8.1% from the year-ago quarter.
Ulta Beauty’s top line is expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $2.62 billion, which suggests an increase of 11.5% from the figure reported in the prior-year quarter. ULTA delivered an earnings beat of 26.2%, on average, in the trailing four quarters.
DICK'S Sporting Goods DKS currently has an Earnings ESP of +2.15% and a Zacks Rank #3. The company is expected to register an increase in the bottom line when it reports first-quarter 2023 results. The Zacks Consensus Estimate for quarterly earnings per share of $3.21 suggests an increase of 12.6% from the year-ago quarter.
DICK'S Sporting Goods’ top line is anticipated to have risen year over year. The consensus mark for revenues is pegged at $2.82 billion, indicating an increase of 4.6% from the figure reported in the year-ago quarter. DKS has a trailing four-quarter earnings surprise of 10%, on average.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
American Eagle Outfitters, Inc. (AEO) : Free Stock Analysis Report
Costco Wholesale Corporation (COST) : Free Stock Analysis Report
DICK'S Sporting Goods, Inc. (DKS) : Free Stock Analysis Report
Ulta Beauty Inc. (ULTA) : Free Stock Analysis Report
