NEW YORK (TheStreet) -- Shares of Costco Wholesale (COST) - Get Costco Wholesale Corporation Report are rising by 4.63% to $151.23 late Thursday morning, after the Issaquah, WA-based membership warehouse operator reported strong 2016 third quarter results.
After yesterday's market close, the company reported that earnings rose 6% year-over-year to $1.24 per share for the third quarter, above Wall Street estimates for earnings of $1.22 per share. Costco reported that 2016 third quarter revenue grew 2.7% year-over-year to $26.8 billion, slightly missing analysts' expectations for revenue of $27.1 billion.
Excluding impacts from gas deflation and a strong U.S. dollar, Costco's comparable store sales rose 3% for the quarter. Factoring those impacts in, same-store sales fell flat in the third quarter.
Costco's comparable store sales may have been flat, but for this quarter and the next, it's about the switch to Visa (V) credit cards not comparable sales, TheStreet's Jim Cramer said on CNBC's "Squawk on the Street" this morning.
"This is the quarter we are saying goodbye to American Express. It's going to be huge for Visa," Cramer noted.
Costco started to issue new Visa cards to its customers, who after June 20 will no longer be able to use their former membership cards from American Express (AXP).
"My point is that the credit card switch is going to be great," Cramer explained.
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Separately, TheStreet Ratings rated Costco Wholesale as a "buy" with a score of A-.
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon.
Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that are rated.
The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and notable return on equity.
TheStreet Ratings feels its strengths outweigh the fact that the company shows weak operating cash flow.
You can view the full analysis from the report here: COST