After witnessing its peers in the Zacks Retail-Discount Industry deliver robust quarterly results this week, the stock of Costco (COST) is on an upward trajectory as it gears up to release its fiscal second-quarter report on March 7th.
Ross Stores (ROST) and Target (TGT) comfortably exceeded earnings expectations, leading to a more than 10% surge in Target’s stock. With Costco’s shares up 17% year-to-date, investors are contemplating riding the wave of momentum that Ross Stores and Target have enjoyed.
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Preview of Q2 & Expansion into International Markets
Costco’s Q2 earnings are forecasted to increase by 9% to $3.60 per share, with a sales projection of 7% growth to $59.2 billion. The Zacks ESP (Expected Surprise Prediction) indicates Costco might outperform bottom-line expectations, with the Most Accurate Estimate pointing to Q2 EPS of $3.64 a share, 1% above the Zacks Consensus.
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Costco’s growth has been bolstered by its expansion into Canada and other global markets, with warehouses in Europe, Mexico, Japan, Korea, Australia, Taiwan, and China. The company’s presence in international e-commerce sites has contributed to exceeding earnings expectations in the last four quarters, with an average earnings surprise of 2.62%.
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Growth Trajectory & Future Outlook
Costco’s annual earnings are anticipated to rise by 6% in fiscal 2024, with a further 9% increase in FY25 to $17.16 per share. Total sales are expected to climb by 4% this year and skyrocket by 7% in FY25 to $271.65 billion.
FY25 projections signal a remarkable 38% sales growth and a substantial 55% surge in earnings over the last five years, showcasing promising prospects for the company’s future.
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Conclusion
The captivating journey of Costco’s growth and its notable international expansion make it an appealing prospect for investors. Holding a Zacks Rank #2 (Buy) at present, the uptrend in FY24 and FY25 earnings estimates suggests that Costco is on track to surpass expectations, fueling this year’s rally further.
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Costco Wholesale Corporation (COST): Free Stock Analysis Report
Target Corporation (TGT): Free Stock Analysis Report
Ross Stores, Inc. (ROST): Free Stock Analysis Report
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
