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Costco Wholesale Fourth Quarter Earnings Preview
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COST
When Costco Wholesale (Nasdaq:COST) releases its fourth quarter earnings on Wednesday, October 10, 2012, it is expected to report earnings that are up 20.4% from a year ago. The consensus estimate is $1.30 per share, up from earnings of $1.08 per share a year ago.
In most situations, when earnings do not meet analyst estimates, a business' stock price will tend to drop. On the other hand, when actual earnings beat estimates by a significant amount, the share price will likely surge. SEE: Surprising Earnings Results
What to Expect: After rising from $1.29 three months ago, the consensus estimate has remained unchanged in the last month. Analysts are projecting earnings of $3.86 per share for the fiscal year.
Costco is expected to beat last year's reported revenue of $28.18 billion and come in at $31.59 billion for the quarter. Revenue for the fiscal year is expected to come in at $98.52 billion.
Company Performance: Revenue for Costco has been on the rise for four consecutive quarters. It increased 8.2% to $22.32 billion in the third quarter. Prior to that, the figure rose 10% in the second quarter, 12.4% in the first quarter and 16.8% in the fourth quarter of the last fiscal year.
Compared to the industry average of 15.4, COST's P/E ratio of 28.3 is quite high. Usually, if a stock has a high P/E ratio, it indicates that the market expects the company to grow earnings quickly in the future. Price/earnings ratios (P/E ratios) provide a measure of the relative value of a stock. A high or low P/E ratio is not good or bad in and of itself, but a company trading with a high P/E ratio must continue to post strong financial performance or its stock price is likely to fall. SEE: The P/E Ratio: A Good Market-Timing Indicator
The stock price has increased from $93.97 on July 9, 2012 to $101.48 over the past quarter. Costco's best recent streak was when its price gained $3.23 per share between September 11, 2012 and September 13, 2012.
The Competition: Costco Wholesale operates membership warehouses that offer a selection of nationally branded and selected private-label products in categories such as food, appliances, and sporting goods, at low prices. Most analysts (12 of 22) rate Costco a buy. This rating hasn't changed in three months.
The company's closest competitor in the retail (specialty) industry is Target (TGT). Analysts are less optimistic about Costco than about Target. Eleven out of 19 analysts rate the latter a buy.
In most situations, when earnings do not meet analyst estimates, a business' stock price will tend to drop. On the other hand, when actual earnings beat estimates by a significant amount, the share price will likely surge. SEE: Surprising Earnings Results
What to Expect: After rising from $1.29 three months ago, the consensus estimate has remained unchanged in the last month. Analysts are projecting earnings of $3.86 per share for the fiscal year.
Costco is expected to beat last year's reported revenue of $28.18 billion and come in at $31.59 billion for the quarter. Revenue for the fiscal year is expected to come in at $98.52 billion.
Company Performance: Revenue for Costco has been on the rise for four consecutive quarters. It increased 8.2% to $22.32 billion in the third quarter. Prior to that, the figure rose 10% in the second quarter, 12.4% in the first quarter and 16.8% in the fourth quarter of the last fiscal year.
The stock price has increased from $93.97 on July 9, 2012 to $101.48 over the past quarter. Costco's best recent streak was when its price gained $3.23 per share between September 11, 2012 and September 13, 2012.
The Competition: Costco Wholesale operates membership warehouses that offer a selection of nationally branded and selected private-label products in categories such as food, appliances, and sporting goods, at low prices. Most analysts (12 of 22) rate Costco a buy. This rating hasn't changed in three months.
The company's closest competitor in the retail (specialty) industry is Target (TGT). Analysts are less optimistic about Costco than about Target. Eleven out of 19 analysts rate the latter a buy.
by
Investopedia Staff
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