Costco Wholesale Corporation
(
COST
), one of the leading U.S. warehouse club operators and an
S&P 500 company, is slated to report its first-quarter fiscal
2013 financial results on Wednesday, December 12.
The current Zacks Consensus Estimate for the quarter is 93
cents a share that reflects growth of 16.5% from the prior-year
quarter earnings. The estimates in the current Zacks Consensus
range between a low of 90 cents and a high of 98 cents a share.
The Zacks Consensus revenue estimate is pegged at $23,743 million
for the quarter under discussion.
Recap of Fourth-Quarter 2012
Costco's fourth-quarter 2012 earnings of $1.39 per share beat
the Zacks Consensus Estimate of $1.30, and surged 28.7% from
$1.08 earned in the prior-year period.
The bottom-line was buoyed by double-digit growth in the top
line due to a rise in membership fees and improved sales of
discretionary items, as consumers seeking discounts started
flocking to warehouse clubs.
The warehouse retailer's total revenue, which includes net
sales and membership fee, climbed 14.3% to $32,218 million from
the prior-year quarter, and surpassed the Zacks Consensus
Estimate of $31,902 million. Net sales jumped 14.3% to $31,524
million, whereas membership fee rose 17.6% to $694 million.
eCommerce sales, including Costco.com and Costco.ca, surged 14%.
Costco's comparable-store sales for the quarter ascended 5%.
Zacks Agreement & Magnitude
The Zacks Consensus Estimate for the first quarter hasn't
shown any movement in the last 7 and 30 days, despite upward
revision in estimates made by 1 and 4 of 18 covering analysts,
respectively.
Analysts raising their estimates are counting upon
better-than-expected November comparable-sales results and
effective cost management, and anticipate Costco to undertake
rapid club expansion plans. Costco's comparable-store sales for
November climbed 6%.
Mixed Earnings Surprise History
With respect to earnings surprises, Costco has met as well as
topped the Zacks Consensus Estimate over the last four quarters
in the range of 0.0% to 6.9%. The average remained at 4.6%,
suggesting that Costco has outperformed the Zacks Consensus
Estimate by the same magnitude in the trailing four quarters.
Closing Comment
Costco continues to be a dominant retail wholesaler based on
the breadth and quality of the merchandises it offers. The
company's strategy to sell products at heavily discounted prices
has helped it sustain growth amidst beleaguered economic
conditions, as cash-strapped customers continue to reckon Costco
as a viable option for low-cost necessities. Having delivered
consistent comparable-store sales growth, Costco is well
positioned in the warehouse club industry.
However, Costco faces stiff competition from
Target Corporation
(
TGT
) and Sam's Club, a division of
Wal-Mart Stores Inc.
(
WMT
), which follows a similar business model that pushes through
high volumes of merchandise at low prices in membership-only
warehouse clubs. Thus, aggressive pricing to gain market share
and drive traffic amid stiff competition may depress sales and
margins.
Costco currently holds a Zacks #3 Rank that translates into a
short-term "Hold" rating. At present, we maintain our long-term
"Neutral" recommendation on the stock.
COSTCO WHOLE CP (COST): Free Stock Analysis
Report
TARGET CORP (TGT): Free Stock Analysis Report
WAL-MART STORES (WMT): Free Stock Analysis
Report
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