Does Costco Deserve More Credit for Q4?

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When Costco Wholesale Corp. (NASDAQ: COST) released its fiscal fourth-quarter financial results after the markets closed on Thursday, the membership club giant said that it had $2.47 in earnings per share (EPS) and $47.50 billion in revenue. The consensus estimates had called for $2.54 in EPS and $47.57 billion in revenue, and in the same period of last year it said it had EPS of $2.36 on $44.41 billion in revenue.

During the latest quarter, net sales increased 7.0% year over year while membership fees increased 5.3%.

Comparable sales increased 5.1% on a companywide basis, driven by: U.S. comparable sales increasing 6.2%; Canada comparable sales increasing 2.6%; other international comparable sales increasing 1.9%; and e-commerce comparable sales increased 19.8%.

This year’s fourth quarter was negatively affected by a $123 million pretax reserve to SG&A ($96 million after tax), or 22 cents per diluted share, related to a product tax assessment.

Costco currently operates 783 warehouses, including 544 in the United States and Puerto Rico, 100 in Canada, 39 in Mexico, 29 in the United Kingdom, 26 in Japan, 16 in Korea, 13 in Taiwan, 11 in Australia, two in Spain, one in France, one in Iceland and one in China. Costco also operates e-commerce websites in the United States, Canada, the United Kingdom, Mexico, Korea and Taiwan.

The company offered no guidance for the fiscal first quarter. However, consensus estimates call for $1.71 in EPS and $37.37 billion in revenue.

Excluding Friday’s move, Costco had outperformed the broad markets, with the stock up about 42% year to date. In the past 52 weeks, the stock was up 22%.

Shares of Costco traded down about 1.5% early Friday to $284.64, in a 52-week range of $189.51 to $307.34. The consensus price target is $292.50.

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