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Factors Setting the Tone for Costco's (COST) Q3 Earnings
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Costco Wholesale Corporation (COST - Free Report) is likely to register an increase in the bottom line when it reports third-quarter fiscal 2021 numbers on May 27, after the closing bell. We note that the Zacks Consensus Estimate for earnings for the quarter under review has increased by a penny over the past seven days to $2.28. The figure suggests growth of roughly 20.6% from the year-ago period.
Notably, this Issaquah, WA-based company has a trailing four-quarter earnings surprise of 2.2%, on average. In the last reported quarter, the company delivered a negative earnings surprise of 11.6%.
Meanwhile, the Zacks Consensus Estimate for revenues is pegged at $45,202 million, indicating an improvement of 21.3% from the prior-year reported figure.
Key Factors to Note
Costco’s growth strategies, better price management, decent membership trends and increasing penetration of e-commerce business have been contributing to its upbeat performance. In fact, the company’s strategy to sell products at discounted prices has helped draw customers, who have been seeking both value and convenience amid the ongoing crisis.
Cumulatively, these factors have been aiding this operator of membership warehouses in registering impressive comparable sales run. The company witnessed an increase of 33.5% in net sales during the four weeks ended May 2, 2021, while comparable sales during the same period rose 32.5%. This followed an increase of 17.6% in net sales and 16% in comparable sales in March 2021.
Notably, the company has been rapidly adopting the omni-channel mantra to provide a seamless shopping experience, whether online or in stores. We note that e-commerce comparable sales increased 20.5% in April 2021. This followed an increase of 57.7% in March 2021.
While aforementioned factors raise optimism about the outcome, margins still remain an area to watch. Analysts pointed that any deleverage in SG&A rate, higher labor and occupancy costs, and increased marketing and other store-related expenses might have weighed on margins. Further, the impact of incremental wages and sanitation costs due to the coronavirus outbreak cannot be ignored.
Costco Wholesale Corporation Price, Consensus and EPS Surprise
Our proven model predicts an earnings beat for Costco this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Costco has a Zacks Rank #3 and an Earnings ESP of +2.75%.
3 More Stocks With Favorable Combination
Here are some other companies you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat:
Abercrombie & Fitch (ANF - Free Report) has an Earnings ESP of +32.30% and a Zacks Rank #3.
Ulta Beauty (ULTA - Free Report) has an Earnings ESP of +10.22% and a Zacks Rank #3.
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made. The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
Image: Bigstock
Factors Setting the Tone for Costco's (COST) Q3 Earnings
Costco Wholesale Corporation (COST - Free Report) is likely to register an increase in the bottom line when it reports third-quarter fiscal 2021 numbers on May 27, after the closing bell. We note that the Zacks Consensus Estimate for earnings for the quarter under review has increased by a penny over the past seven days to $2.28. The figure suggests growth of roughly 20.6% from the year-ago period.
Notably, this Issaquah, WA-based company has a trailing four-quarter earnings surprise of 2.2%, on average. In the last reported quarter, the company delivered a negative earnings surprise of 11.6%.
Meanwhile, the Zacks Consensus Estimate for revenues is pegged at $45,202 million, indicating an improvement of 21.3% from the prior-year reported figure.
Key Factors to Note
Costco’s growth strategies, better price management, decent membership trends and increasing penetration of e-commerce business have been contributing to its upbeat performance. In fact, the company’s strategy to sell products at discounted prices has helped draw customers, who have been seeking both value and convenience amid the ongoing crisis.
Cumulatively, these factors have been aiding this operator of membership warehouses in registering impressive comparable sales run. The company witnessed an increase of 33.5% in net sales during the four weeks ended May 2, 2021, while comparable sales during the same period rose 32.5%. This followed an increase of 17.6% in net sales and 16% in comparable sales in March 2021.
Notably, the company has been rapidly adopting the omni-channel mantra to provide a seamless shopping experience, whether online or in stores. We note that e-commerce comparable sales increased 20.5% in April 2021. This followed an increase of 57.7% in March 2021.
While aforementioned factors raise optimism about the outcome, margins still remain an area to watch. Analysts pointed that any deleverage in SG&A rate, higher labor and occupancy costs, and increased marketing and other store-related expenses might have weighed on margins. Further, the impact of incremental wages and sanitation costs due to the coronavirus outbreak cannot be ignored.
Costco Wholesale Corporation Price, Consensus and EPS Surprise
Costco Wholesale Corporation price-consensus-eps-surprise-chart | Costco Wholesale Corporation Quote
What the Zacks Model Unveils
Our proven model predicts an earnings beat for Costco this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Costco has a Zacks Rank #3 and an Earnings ESP of +2.75%.
3 More Stocks With Favorable Combination
Here are some other companies you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat:
Best Buy (BBY - Free Report) has an Earnings ESP of +6.79% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Abercrombie & Fitch (ANF - Free Report) has an Earnings ESP of +32.30% and a Zacks Rank #3.
Ulta Beauty (ULTA - Free Report) has an Earnings ESP of +10.22% and a Zacks Rank #3.
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
Download FREE: How to Profit from Trillions on Spending for Infrastructure >>