Costco COST is scheduled to release its Q3 fiscal 2019 financial results after the closing bell Thursday. Shares of COST have climb 18% this year to outpace its industry’s average climb as it continues to report strong e-commerce growth and comparable sales.
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Costco, like many of its retail peers such as Target TGT, Walmart WMT, and Kroger KR, has rolled more robust digital and delivery offerings in order to fend off Amazon’s AMZN encroachment. The Issaquah, Washington-based retailer currently offers free two-day delivery for non-perishable food and household supplies to customers nationwide on orders of $75 or more, with a fee charged for smaller orders. Costco has also expanded its same-day delivery service to “most” metropolitan areas through its Instacart partnership.
Meanwhile, first quarter earnings season has been somewhat strong for retailers, with Target and Walmart both showing signs of strength. As of Wednesday morning, 33 of the 39 retailers in the S&P 500 had reported their quarterly earnings results. Overall, total earnings for these retailers climbed 13.2% from the same period last year on 8.1% higher revenues, with 75.8% beating EPS estimates and 51.5% beating revenue estimates (also read: Q1 Retail Sector Scorecard).
Before we jump into what to expect from COST’s quarterly results, let’s quickly look at its recent price moment. Shares of Costco dipped 2.28% during regular trading hours Wednesday to $240.69 per share, down roughly 4% off their 52-week intraday trading highs. Jumping back further, investors will notice that Costco stock has crushed the S&P 500 over the past five years, as well as rivals TGT and WMT.
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Right off the bat, Wall Street often has a more complete picture of what to expect from Costco since the company is one a few retailers that still reports monthly sales numbers. In April, the big-box giant’s sales popped 7.3% to $11.60 billion, with e-commerce sales up nearly 24%. This marked a slow down from April 2018’s 13.1% climb, but helps show COST has been able to post impressive growth as its customers remain loyal to the firm’s discounts and buy-in-bulk model.
With that said, our current Zacks Consensus Estimate calls for the company’s Q3 fiscal 2019 revenue to climb 7.8% to reach $34.88 billion, which includes Costco’s membership fees. This would beat last quarter’s roughly 7.3% top-line expansion and come on top of the prior-year quarter’s 12% revenue growth.
Moving onto the bottom end of the income statement, Costco’s adjusted quarterly earnings are expected to pop 7.65% to reach $1.83 per share. Over the course of the quarter, Costco has seen its Q3 earnings consensus climb by $0.01 on the back of some positive earnings estimate revision activity.
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