Costco’s Strong Performance Sets Expectations High Ahead of Q1 Earnings
Issaquah, Washington-based Costco Wholesale Corporation (COST) runs a chain of membership-only warehouse stores. With a market capitalization of $393 billion, Costco operates numerous outlets in North America, Asia, and Europe, along with an online store. The company is set to release its Q1 earnings for 2025 on Thursday, Dec. 12.
Analysts Anticipate Notable Earnings Growth
Analysts project that Costco will report a profit of $3.78 per share, marking an 8.6% increase from the $3.48 reported in the same quarter last year. Over the previous four quarters, Costco has consistently outperformed Wall Street’s earnings expectations. Its adjusted earnings per share (EPS) for the last reported quarter rose 6% year-over-year to $5.15, surpassing consensus estimates by 2%.
Future Outlook: Strong Earnings Expected
For fiscal 2025, expectations for Costco’s adjusted EPS stand at $17.75, reflecting a 10.2% increase from $16.11 in fiscal 2024. By fiscal 2026, analysts anticipate adjusted EPS will grow by 9% year-over-year to $19.35.
Strong Stock Performance Compared to Peers
COST has seen its stock price increase by 34.4% year-to-date, which is better than the S&P 500 Index’s ($SPX) 22.3% gains and the Consumer Staples Select Sector SPDR Fund’s (XLP) 11.6% returns during the same period.
Recent Earnings and Market Performance
Costco’s stock dropped 1.8% following its fiscal 2024 earnings release on Sept. 26, despite reporting a 5% year-over-year increase in total revenue, totaling $254.5 billion. This revenue slightly fell short of analysts’ expectations, which likely contributed to the decline in stock prices.
On the positive side, Costco demonstrated significant cost control, resulting in a 17.1% surge in net income to $7.4 billion. Additionally, after experiencing a downturn post-pandemic, e-commerce sales rebounded, reporting a remarkable 16.2% growth in constant currency compared to fiscal 2023.
Analyst Sentiment Remains Optimistic
The general outlook on COST stock is moderately bullish, with a “Moderate Buy” rating among analysts. Among the 32 analysts monitoring the stock, 18 recommend a “Strong Buy,” three suggest a “Moderate Buy,” and 11 recommend a “Hold”. The average price target of $950.48 indicates a potential upside of 7.2% from current levels.
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On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
