tiprankstipranks
Costco Reporting Q2 Today: Here’s What’s in Store
Stock Analysis & Ideas

Costco Reporting Q2 Today: Here’s What’s in Store

Story Highlights

Costco is set to announce its second-quarter financials. COST’s value offerings set it apart from the competition.

Costco Wholesale Corporation (NASDAQ:COST) will announce its Q2 financials on March 2. While the retailer’s peers have set a cautious tone due to macro headwinds, Costco’s value offerings and loyal membership base will likely support its sales and earnings. 

Expectations from COST’s Q2 Earnings

Our data shows that Costco has surpassed analysts’ sales estimates 66.67% of the time in the past 12 months. In comparison, the overall industry average stands at 65.49%. As for Q2, Wall Street expects Costco to report sales of $55.57 billion compared to $51.9 billion in the prior-year quarter

Thanks to the leverage from higher sales, analysts expect Costco to report earnings of $3.22 per share, compared to $2.92 in the prior-year quarter. Analysts’ sales and earnings estimates also reflect quarter-over-quarter improvement in sales and profit.

Recently, Truist Financial analyst Scot Ciccarelli increased his price target on COST stock following its January sales data. Ciccarelli raised the price target to $568 from $538, citing the retailer’s “extreme value proposition” that enables it to drive traffic and membership base even in a soft economic environment. 

What is the Prediction for Costco Stock?

Costco stock has 16 Buy and seven Hold recommendations from Wall Street, translating into a Moderate Buy consensus rating. Furthermore, analysts’ 12-month average price target of $559 implies 15.45% upside potential. 

Bottom Line

Pressure on consumer spending due to macro weakness is taking a toll on non-food sales. However, Costco’s value proposition and strong membership renewable rate set it apart from the competition and position it well to deliver solid sales and earnings despite a challenging macro outlook. 

While Costco continues to impress with its financial performance, its high valuation remains a concern. Costco has historically traded at a premium from its peers owing to its solid comparable sales. Currently, COST stock is trading at a forward P/E multiple of 36.6 compared to the sector median of 18.36. Given the weak macro environment, Costco’s high valuation could limit the upside in the short term. 

Disclosure

Trending

Name
Price
Price Change
S&P 500
Dow Jones
Nasdaq 100
Bitcoin

Popular Articles