Time to Buy Costco's (COST) Stock as Earnings Approach? (2024)
Shaun Pruitt
·2 min read
With several of its Zacks Retail-Discount Industry peers already posting strong quarterly results this week, Costco’s COSTstock is moving higher ahead of its fiscal second quarter report on Thursday, March 7.
Notably,Ross Stores ROSTand Target TGTwere able to comfortably top earnings expectations on Wednesday with the ladder seeing its stock spike over +10% yesterday. Let’s see if it’s time to buy into Costco’s momentum with COST shares soaring +17% year to date as the large bulk retailer hopes to join Ross Stores and Target in posting favorable quarterly results.
Costco’s Q2 earnings are expected to rise 9% to $3.60 per share with sales projected to be up 7% to $59.2 billion. The Zacks ESP (Expected Surprise Prediction) also indicates Costco could surpass its bottom line expectations with the Most Accurate Estimate having Q2 EPS slated at $3.64 a share and 1% above the Zacks Consensus.
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Expansion in Canada and other international locations has fueled Costco’s recent growth with the company having warehouses across Europe, Mexico, Japan, Korea, Australia, Taiwan, and China as well. Costco also operates e-commerce sites in several of these international locations and has now surpassed earnings expectations in each of its last four quarterly reports posting an average earnings surprise of 2.62%.
Costco’s annual earnings are now expected to be up 6% in fiscal 2024 and projected to climb another 9% in FY25 to $17.16 per share. Total sales are forecasted to rise 4% this year and jump another 7% in FY25 to $271.65 billion.
Furthermore, FY25 top and bottom-line projections would represent 38% and 55% growth over the last five years respectively.
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Bottom Line
Costco’s growth and its international expansion in particular is very intriguing with its stock landing a Zacks Rank #2 (Buy) at the moment. To that point, FY24 and FY25 earnings estimates have trended higher over the last week which is a good sign that Costco may be able to reach or exceed its bottom line expectations and extend this year’s rally.
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The highest analyst price target is $905.00 ,the lowest forecast is $601.00. The average price target represents 8.88% Increase from the current price of $713.72. Costco's analyst rating consensus is a Strong Buy. This is based on the ratings of 26 Wall Streets Analysts.
For the fiscal year ending Aug 2024 , the consensus EPS* forecast has remained the same over the past week at 15.81 and increased over the past month from 15.75 to 15.81(0.38%). Of the 2 analysts making yearly forecasts, 2raised and none lowered their forecast.
Costco Wholesale Corp (COST) Reports Solid Earnings Growth in Q2 Fiscal 2024. Net Sales: Increased by 5.7% to $57.33 billion in Q2 and 5.9% to $114.05 billion YTD. Net Income: Rose to $1.743 billion in Q2, with earnings of $3.92 per diluted share.
Investors are always looking for stocks that are poised to beat at earnings season and Costco Wholesale Corporation COST may be one such company. The firm has earnings coming up pretty soon, and events are shaping up quite nicely for their report.
Many analysts expect an earnings beat this time around for Costco. If it can keep costs at bay with a sound strategy and paint a pretty picture for the rest of 2024, we may see this stock price keep moving in a bullish manner.
Costco EPS for the twelve months ending February 29, 2024 was $15.29, a 12.34% increase year-over-year. Costco 2023 annual EPS was $14.16, a 7.76% increase from 2022. Costco 2022 annual EPS was $13.14, a 16.59% increase from 2021. Costco 2021 annual EPS was $11.27, a 24.94% increase from 2020.
According to the latest long-term forecast, Costco price will hit $800 by the end of 2024 and then $900 by the middle of 2025. Costco will rise to $1000 within the year of 2026, $1100 in 2027, $1300 in 2028, $1500 in 2029, $1600 in 2030, $1700 in 2031, $1800 in 2033 and $2000 in 2035.
Costco Wholesale Corp quote is equal to 715.790 USD at 2024-04-16. Based on our forecasts, a long-term increase is expected, the "COST" stock price prognosis for 2029-04-11 is 1132.935 USD. With a 5-year investment, the revenue is expected to be around +58.28%. Your current $100 investment may be up to $158.28 in 2029.
From 1985 when it became public to 2022, Costco grew its sales and profits at a compounded annual rate of 12% and 13%, respectively. Its stock price grew at a 17% annual rate compared to the S&P's 9.3% rate.
It's all about the members. Costco, as opposed to traditional retailers like Walmart or Target, charges shoppers an annual fee for the privilege of shopping in its huge warehouses. Customers pay up because they benefit from Costco's low markups and their savings more than make up for the price of the membership.
Key Takeaways. Costco makes some of its profits from its merchandise, but the bulk of its profits come from membership dues. Only members can shop at Costco. The membership business model allows Costco to undersell the competition by offering products in bulk at lower prices to ensure customer loyalty.
Costco Wholesale topped earnings expectations, but the stock fell following the company's rare revenue miss. The company's fiscal second-quarter revenue of $58.4 billion missed analyst projections for $59.1 billion.
Costco's stock is expensive and investors have to pay a big premium to own it. The company, however, is still growing and has plenty of opportunities to tap into in the long run. Its e-commerce business has been strong with comparable sales growth of more than 18% last quarter.
The main piece of good news driving shares higher into 2024 is Costco's improving growth rates. The company releases monthly sales updates, in contrast with most retailing peers, and that's why investors know more about how this business performed through the holiday shopping season.
Costco Wholesale topped earnings expectations, but the stock fell following the company's rare revenue miss. The company's fiscal second-quarter revenue of $58.4 billion missed analyst projections for $59.1 billion.
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