Costco Surpasses Q3 Estimates, Shares Surge 4% After Hours

Strong Q3 Performance

Costco Wholesale COST reported fiscal third-quarter results that exceeded expectations, with shares rising 4% during the trading session. The company has posted a 14% gain year-to-date and over 120% in the past three years.

Costco’s stock price remains high, at over $1,000 per share, raising questions about potential buying opportunities.

Costco’s Q3 Results

Fueled by strategic pricing and bulk discounts, Costco’s Q3 sales climbed 8% year-over-year to $63.2 billion, above the $63.14 billion estimate. Comparable sales rose 6%, with membership fee revenue increasing to $1.24 billion, up from $1.12 billion a year prior. EPS for Q3 reached $4.28, surpassing estimates of $4.25 and marking a 13% increase from last year’s $3.78.

E-Commerce and Expansion Plans

Costco opened nine warehouses in Q1, including a relocation in Melbourne, Australia, and its 37th in Japan. The company aims to add 10 more warehouses in Q4, featuring expansions in Sweden, Korea, and Canada. In e-commerce, Costco’s sales grew 15% in Q3, supported by Costco Logistics for bulk and large-item deliveries.

Response to Tariff Challenges

CEO Ron Vachris acknowledged tariff impacts but expressed confidence in the company’s management’s ability to adapt. Approximately one-third of U.S. sales are imported, with 8% from China. To mitigate tariffs, Costco is sourcing more locally produced goods and securing summer inventory early.

While Costco does not typically offer forward guidance, Zacks forecasts total sales growth of 8% in fiscal 2025, with an additional 7% increase expected for FY26, reaching $294.05 billion. Annual earnings are anticipated to rise 11% this year, with another 10% jump projected for FY26 at $19.76 per share.

Bottom Line

Following its positive Q3 report, Costco COST holds a Zacks Rank of #2 (Buy). Estimates for FY25 and FY26 EPS have risen slightly, enhancing Costco’s growth outlook. Continued positive revisions to earnings estimates could signal further gains for Costco shares.