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Costco (COST) Lined Up for Q4 Earnings: What's in Store?

·4 min read

Costco Wholesale Corporation COST is likely to register an increase in the top line when it reports fourth-quarter fiscal 2022 results on Sep 22 after the closing bell. The Zacks Consensus Estimate for revenues is pegged at $71.84 billion, indicating growth of 14.6% from the prior-year reported figure.

The bottom line of this Issaquah, WA-based company is anticipated to have improved year over year. The Zacks Consensus Estimate for fourth-quarter earnings per share has increased by a couple of cents to $4.11 over the past 30 days. The figure suggests an increase of 5.4% from the year-ago period.

Costco has a trailing four-quarter earnings surprise of 9.7%, on average. In the last reported quarter, the company’s bottom line surpassed the Zacks Consensus Estimate by 5.7%.

Costco Wholesale Corporation Price, Consensus and EPS Surprise

Costco Wholesale Corporation Price, Consensus and EPS Surprise
Costco Wholesale Corporation Price, Consensus and EPS Surprise

Costco Wholesale Corporation price-consensus-eps-surprise-chart | Costco Wholesale Corporation Quote

Key Factors to Note

Costco’s growth strategies, better price management, decent membership trends and the increasing penetration of the e-commerce business have been contributing to its upbeat performance. The company’s strategy to sell products at discounted prices has helped attract customers who have been seeking both value and convenience amid the inflationary environment.

The abovementioned factors have been aiding this operator of membership warehouses in registering an impressive sales run. Costco’s net sales grew 15.3% to $70.8 billion during the 16-week fourth quarter ended Aug 28, 2022. Comparable sales increased 13.7% during the said period.

The company has been rapidly adopting the omnichannel mantra to provide a seamless shopping experience, whether online or in stores. E-commerce comparable sales increased 7.1% during the 16-week period ended Aug 28, 2022.

While the abovementioned factors raise optimism about the outcome, margins remain an area to watch. Any deleverage in the SG&A rate, higher labor and occupancy costs, and increased marketing and other store-related expenses might have weighed on margins.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Costco this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that’s not the case here.

Costco has an Earnings ESP of -0.06% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With the Favorable Combination

Here are a few companies that you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Kroger KR currently has an Earnings ESP of +0.21% and a Zacks Rank #2. The company is expected to register bottom-line growth when it reports third-quarter fiscal 2022 results. The Zacks Consensus Estimate for quarterly earnings per share of 80 cents suggests growth of 2.6% from the year-ago quarter’s reported figure. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kroger’s top line is anticipated to rise year over year. The consensus mark for revenues is pegged at $33.92 billion, indicating an increase of 6.5% from the year-ago quarter. KR has a trailing four-quarter earnings surprise of 15.7%, on average.

Lowe's LOW currently has an Earnings ESP of +0.25% and a Zacks Rank of 3. The company is likely to register an increase in the bottom line when it reports third-quarter fiscal 2022 results. The Zacks Consensus Estimate for quarterly earnings per share of $3.10 suggests growth of 13.6% from the year-ago quarter’s reported figure.

Lowe's top line is expected to rise year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $23.09 billion, which suggests a rise of 0.8% from the figure reported in the prior-year quarter. LOW has a trailing four-quarter earnings surprise of 7.5%, on average.

Hibbett HIBB currently has an Earnings ESP of +5.85% and a Zacks Rank #2. The company is likely to register an increase in the bottom line when it reports third-quarter fiscal 2023 numbers. The Zacks Consensus Estimate for quarterly earnings per share of $2.54 suggests an increase of 51.2% from the year-ago reported number.

Hibbett’s top line is expected to increase year over year. The Zacks Consensus Estimate for quarterly revenues is pegged at $427.3 million, which suggests an increase of 12% from the prior-year quarter.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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Lowe's Companies, Inc. (LOW) : Free Stock Analysis Report
 
The Kroger Co. (KR) : Free Stock Analysis Report
 
Costco Wholesale Corporation (COST) : Free Stock Analysis Report
 
Hibbett, Inc. (HIBB) : Free Stock Analysis Report
 
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