What to Expect From Costco Earnings

By Chris Lange Updated Jan 13, 3:01AM EST · Published Sep 29, 8:45AM EDT

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What to Expect From Costco Earnings — © Thinkstock

Costco Wholesale Corp. (NASDAQ: COST) is scheduled to report its fiscal fourth-quarter financial results after the markets close on Thursday. The consensus estimates from Thomson Reuters are calling for $1.73 in earnings per share (EPS) on $36.81 billion in revenue. The same period of last year reportedly had EPS of $1.73 and $35.78 billion in revenue.

Costco raised its minimum wage for store employees to $13 an hour beginning in March, and that very likely contributed to the higher SG&A total for the third quarter. Keep in mind, though, that SG&A is less than a tenth the company’s merchandise costs. In March, Costco estimated the impact of higher employee wages at about one cent per share in the third quarter and about two cents a share in each of the next three quarters.

There is a reasonable chance that Costco will raise its membership fees early in 2017, if not a little sooner. In 2011 the company boosted its basic fee by $5, and since then membership renewals have been running at around 85% to 90%. A similarly sized increase is not likely to send customers fleeing. Costco’s new credit card deal with Visa also could help boost memberships.

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A few analysts weighed in on Costco ahead of earnings:

Cowen reiterated an Outperform rating with a $170 price target.
Robert Baird has a Buy rating and a $175 price target.
Barclays has an Equal Weight rating with a $158 price target.
Jefferies reiterated a Hold rating.
Piper Jaffray reiterated an Overweight rating.
BMO Capital Markets reiterated an Outperform rating with a $180 price target.
Guggenheim reiterated a Neutral rating.
Nomura reiterated a Buy rating with a $185 price target.
Citigroup has a Neutral rating.
JPMorgan reiterated a Buy rating with a $179 price target.

So far in 2016, Costco has underperformed the broad markets, with the stock down nearly 7%. Over the past 52 weeks, the stock is up about 5%.

Shares of Costco closed Wednesday at $149.41, with a consensus analyst price target of $169.38 and a 52-week trading range of $138.57 to $169.73.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.