Costco Wholesale Corporation (COST) Earnings Preview: Will Earnings Top Expectations For Third Time In a Row?

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Costco Wholesale Corporation (NASDAQ:COST) will report its financial numbers on March 3 for the first quarter. Will its earnings come in above the Wall Street analysts’ expectations for the third time in a row? The gasoline price impact and the effect of the foreign exchange will likely hold the key for its earnings to beat the predictions.

COMPS

Costco Wholesale Corporation (NASDAQ:COST) has already disclosed comparable store sales and total sales for the month of December and January. The first quarter ends in February only. For both the months, the company’s United States division posted strong comparable store sales of 5% and 2% respectively. However, International segment’s comparable store sales witnessed a fall of 1% and 4% respectively in December and January. As a result, total comps recorded a 3% uptick in December and flat growth in January.

Excluding the impact of gasoline and foreign exchange, the company’s comparable store sales in the Americas would have witnessed a growth of 8% and 7% respectively during the two months. Similarly, the international division would have recorded 8% and 6% growth respectively in the two-month period. As a result, its total comps, excluding foreign exchange and gasoline impact, would have witnessed 7% and 6% growth in December and January.

For December, Costco Wholesale Corporation (NASDAQ:COST) delivered 5% growth in net sales to $12.12 billion from $11.53 billion. Similarly, in January, the company’s net sales advanced 2% to $8.16 billion from $7.99 billion in the preceding month. This means that the average growth rate in the two-month period was 3.89% and the total reached $20.28 billion.

Earnings Expectations

On average, Wall Street analysts estimated the company to deliver an earnings per share growth of 12.38% on a revenue uptick of 5.4%. This translates into earnings of $1.18 a share and $27.74 billion in revenue. The company should have generated $7.46 billion in February to meet the Street expectations.

Costco Wholesale Corporation (NASDAQ:COST)’s earnings failed to meet estimations in two of the last four quarters. It could be a third time in a row if it managed its foreign currency and gasoline impact carefully.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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