Costco Wholesale Up 2.41% To $498.30 After Earnings Beat

Friday, May 26, 2023 - Costco Wholesale (COST) reported upside earnings and downside revenues.

The consensus among analysts for Costco Wholesale was for an earnings per share (EPS) of $3.29. The firm was able to surpass those projections, reporting an EPS of $3.43, a positive surprise of $0.14 (4%). Profits rose 8% year-over-year after reporting an EPS of $3.17 in its year-ago quarter. The positive growth rate signals that the Consumer Defensive company is performing well amid recent economic conditions.

Analyst projections for Costco Wholesale revenue came in at a consensus of $54.6 billion. Third-Quarter revenues missed estimates for $53.6 billion by $922 million (2%). The company achieved 2% growth year-over-year compared to the firm's revenue of $52.6 billion from the year-ago quarter. The higher earnings growth relative to revenue signals Costco Wholesale has improved its profit margin.

The stock is up 2.41% to $498.30 after the report.

Costco Wholesale's earnings expanded faster than revenues, signaling widening profit margins.

Wall Street Analysts had an average rating of Buy on the stock prior to the report.

Trading in the five days leading up to the report earned Costco Wholesale a Bearish Sentiment Rank from InvestorsObserver.

Prior to the report, InvestorsObserver gave the stock an overall score of 55. Meanwhile, the average Wall Street analyst rated the stock a Buy.

The leading warehouse club, Costco has 815 stores worldwide (at the end of fiscal 2021), with most sales derived in the United States (72%) and Canada (14%). It sells memberships that allow customers to shop in its warehouses, which feature low prices on a limited product assortment. Costco mainly caters to individual shoppers, but roughly 20% of paid members carry business memberships. Food and sundries accounted for 40% of fiscal 2021 sales, with non-food merchandise 29%, warehouse ancillary and other businesses (such as fuel and pharmacy) nearly 17%, and fresh food 14%. Costco's warehouses average around 146,000 square feet; over 75% of its locations offer fuel. About 7% of Costco's global sales come from e-commerce (excluding same-day grocery and various other services).