Costco Wholesale (NASDAQ: COST) has confirmed the release date for its fiscal Q2 2022 earnings report, which will be on Thursday, March 3, 2022, after market close.
What to look for: since the onset of the COVID-19 pandemic, the membership-only big-box retailer has flourished after it was deemed an essential retailer that continued to operate as others shut down temporarily. In recent times the retailer has had to withstand supply chain disruptions, and its outlook seems to be impressive. Investors will be keen on membership price increase, considering the company has been increasing the same after every five years. The last time the company reviewed the membership was in 2017.
Earnings: Stockearning’s estimated EPS is expected to be $2.74 per share, and if the company meets the estimate, it will represent a Yoy increase of 28.04%. In fiscal Q1 2022, the company had EPS of $2.97, beating estimates by 14.97%. Historical EPS performance shows that in the past 12 quarters, the company has topped estimates 21 times (58%) and missed 13 times (36%).
Revenue: The company is expected to report revenue of $51.29 billion in Q2 2022, representing YoY growth of 14%. If the company revises yearly membership fees by $10, that could result in additional revenue of $625 million per year for 62.5 million memberships.
Stock movement: COST shares have lost 0.3% since the company released its last earnings release. Interestingly, following the earnings release, the company’s shares have been UP 27 times in the past 47 quarters. So, the historical price reaction suggests a 57% probability of the share price going DOWN following the earnings release. According to the Stockearning algorithm, the predicted volatility on the first day is +/-2%, while the predicted volatility on the seventh day is +/-3%.
What analysts are saying: Baird analyst Peter Benedict maintained a Buy rating on the stock following its sales data in January. Even while the stock trades at an "elevated" price, the company's traffic growth remains exceptional. In addition, according to the analyst, its category performance was again wide-ranging, and its membership pool has never been better.
Truist analyst Scot Ciccarelli commenced coverage in Costco with a Buy rating and a price target of $606. According to the analyst, Costco has "almost unparalleled" purchasing power because of its scale and buying concentration. In addition, Ciccarelli says the company has the biggest entry barriers in retail because of the exceptional value it provides to its members.
Cowen analysts Oliver Chen raised his price target on the stock from $520 to $630 and maintained a Buy rating on the shares. For the second month in a row, December, comparable sales showed a slowdown, according to the analyst. However, he believes they are set to keep comps far above pre-pandemic rates and continue to acquire market share because membership patterns are reaching record highs and the distribution network is well-positioned.
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