What to Expect When Costco Wholesale (COST) Reports Earnings

NEW YORK (TheStreet) -- Shares of Costco Wholesale Corp  (COST) were higher by 0.35% to $143.75 in early market trading Wednesday, ahead of the warehouse retailer's latest quarterly earnings release.

The company is slated to report its fiscal third-quarter earnings results after the market closes later today.

TheStreet's Jim Cramer, Portfolio Manager of the Action Alerts PLUS Charitable Trust Portfolio believes Costco may be an opportunity going into the quarter, saying it's a very strong company that's been down for quite a long time.

Wall Street is expecting Costco to report a profit of $1.15 per share on revenue of $26.63 billion for the third quarter, according to analysts polled by Thomson Reuters.

In the same quarter of last year, the company reported earnings of $1.07 per share on revenue of $25.79 billion.

Issaquah, Wash.-based Costco currently operates 671 warehouses, including 474 in the U.S. and Puerto Rico, 88 in Canada, 34 in Mexico, 26 in the U.K., 20 in Japan, 11 in Korea, 10 in Taiwan, seven in Australia and one in Spain.

Separately, TheStreet Ratings team rates COSTCO WHOLESALE CORP as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:

"We rate COSTCO WHOLESALE CORP (COST) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, compelling growth in net income, good cash flow from operations and solid stock price performance. We feel its strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 5.8%. Since the same quarter one year prior, revenues slightly increased by 4.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • COSTCO WHOLESALE CORP has improved earnings per share by 28.6% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, COSTCO WHOLESALE CORP increased its bottom line by earning $4.66 versus $4.63 in the prior year. This year, the market expects an improvement in earnings ($5.22 versus $4.66).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Food & Staples Retailing industry. The net income increased by 29.1% when compared to the same quarter one year prior, rising from $463.00 million to $598.00 million.
  • Net operating cash flow has increased to $900.00 million or 26.22% when compared to the same quarter last year. In addition, COSTCO WHOLESALE CORP has also vastly surpassed the industry average cash flow growth rate of -24.81%.
  • Powered by its strong earnings growth of 28.57% and other important driving factors, this stock has surged by 25.68% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • You can view the full analysis from the report here: COST Ratings Report

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