Retail

What to Expect From Costco Earnings

Costco Wholesale Corp. (NASDAQ: COST) is scheduled to report its fiscal third-quarter financial results Wednesday after the markets close. Thomson Reuters has consensus estimates of $1.16 in earnings per share (EPS) on $26.63 billion in revenue. In the same period of the previous year, the retailer reported EPS of $1.07 and revenue of $25.79 billion.

The discount giant reported that April same-store sales, including gasoline sales and foreign exchange effects, rose 2% in the United States and fell 4% internationally. Overall, same-store sales were flat in the month. Excluding gasoline and currency exchanges, U.S. sales rose 7% and international sales rose 9%. On the same basis worldwide, sales in the quarter rose 7%. Net sales for the month totaled $8.75 billion, up 2% year-over-year. Retail Metrics had projected a same-store sales increase of 0.4% (5.1% excluding gasoline sales and foreign exchange effects).

In late April, Costco’s board of directors reauthorized a common stock repurchase program of up to $4 billion with an expiration date in April 2019. What investors should know is that the new plan effectively replaces the prior $4 billion buyback program. Where the plan gets interesting is that the expiring plan was set to end later in April, and it had an unused authorization remaining of about $2.5 billion.

The board also declared a quarterly cash dividend on its common stock, raising it from $0.355 to $0.40 per share. This is now to be $1.60 per share on an annualized basis, which generates a yield of about 1.1%.

This dividend hike does not feel like a home run, but when you add in that the company is buying back more stock it may look a bit better.

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On Wednesday morning, shares of Costco were up 1% to $144.66, in a 52-week trading range of $113.51 to $156.85. The stock has a consensus analyst price target of $155.09.