Costco (COST) beats fourth-quarter earnings estimates

Costco (COST) reported quarterly earnings of $5.15 per share, beating the Zacks Consensus Estimate of $5.05 per share. This compares to earnings of $4.86 per share a year ago. These figures are adjusted for one-time items.

This quarterly report represents an earnings surprise of 1.98%. A quarter ago, it was expected that this warehouse operator would post earnings of $3.70 per share when it actually produced earnings of $3.78 corresponds to a surprise of 2.16%.

Over the last four quarters, the company has surpassed consensus EPS estimates four times.

Costco, which belongs to the Zacks Retail Discount Industry industry, reported revenues of $79.7 billion for the quarter ended August 2024, missing the Zacks Consensus Estimate by 0.07%. This compares to year-ago sales of $78.94 billion. The company has topped consensus revenue estimates just once in the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings release.

Costco shares have gained about 37.6% since the beginning of the year, while the S&P 500 has gained 20%.

What's next for Costco?

While Costco has outperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarters, but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revision trend for Costco is mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status results in a Zacks Rank #3 (Hold) for the stock. The shares are therefore expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the coming days. The current consensus EPS estimate is $3.87 on revenue of $62.32 billion for the coming quarter and $17.65 on revenue of $273.26 billion for the current financial year.

The story continues

Investors should be aware that the outlook for the industry can also have a significant impact on the stock's performance. The Zacks Industry Rank currently places Retail – Discount in the bottom 25% of the 250+ Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

Genuine Parts (GPC), another stock in the broader Zacks Retail Wholesale sector, has not yet reported results for the quarter ended September 2024.

This auto and industrial parts retailer is expected to report quarterly earnings of $2.45 per share in its upcoming report, representing a year-over-year change of -1.6%. The consensus EPS estimate for the quarter has remained unchanged over the past 30 days.

Genuine parts sales are expected to be $5.98 billion, up 2.7% from the year-ago quarter.

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