Will Costco Continue Its Outperformance With Q2 Results?

Costco Wholesale Corp. (NASDAQ: COST) is scheduled to release its fiscal second-quarter financial results after the markets close on Thursday. Analysts are calling for $2.04 in earnings per share (EPS) and $37.52 billion in revenue. The same period of last year reportedly had $1.89 in EPS and $34.74 billion in revenue.

For the retail month of April, Costco reported net sales of $11.39 billion, a decrease of 1.8% from $11.60 billion last year. During this period, comparable sales decreased across the board. Comp sales were down 3.3% year over year in the United States, 11.7% in Canada and 4.6% in other international markets. Note that e-commerce sales increased 85.7% in this time.

The wholesaler reported net sales of $15.49 billion for the retail month of March (the five weeks ended April 5, 2020), an increase of 11.7% from $13.87 billion last year. Comparable sales increased 9.6% as a whole. This consisted of U.S. comps increasing 10.7%, Canada comps up 1.2% and other international comps up 12.2%. E-commerce sales increased 48.3% in this time.

While a significant amount of consumer demand already may be priced into Costco stock, it will be interesting to see how the numbers shake out in the report.

Excluding Thursday’s move, Costco Wholesale stock had outperformed the S&P 500 and Dow Jones industrial average with a gain of 4% year to date. In the past 52 weeks, the share price was up closer to 24%.

A few analysts weighed in on Costco ahead of the report:

  • Oppenheimer has a Buy rating with a $335 price target.
  • Deutsche Bank has a Hold rating and a $290 price target.
  • Morgan Stanley rates it as Overweight with a $320 price target.
  • Citigroup has a Neutral rating with a $310 price target.
  • Nomura has a Hold rating and a $310 price target.

Costco Wholesale stock traded up about 1% at $309.07 on Thursday, in a 52-week range of $233.05 to $325.26. The consensus price target is $323.96.