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Costco's (COST) Q2 Earnings Top Estimates, Comps Up 14.4% Y/Y
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Costco Wholesale Corporation (COST - Free Report) came out with decent second-quarter fiscal 2022 results, wherein both the top and the bottom lines not only surpassed the Zacks Consensus Estimate but also improved year over year. The quarter marked the fourth straight earnings beat. This operator of membership warehouses maintained its impressive comparable sales run. The company’s e-commerce sales also continued to showcase strength. However, supply chain bottlenecks and higher labor and freight costs remain concerns.
Q2 Earnings & Sales Picture
Costco posted quarterly earnings of $2.92 per share that handily beat the Zacks Consensus Estimate of $2.69, and rose from $2.14 reported in the year-ago period. The year-over-year increase in the bottom line can be attributed to higher revenues.
Total revenues, which include net sales and membership fees, were $51,904 million, up 15.9% from the prior-year quarter. The metric surpassed the Zacks Consensus Estimate of $51,305 million.
Costco’s growth strategies, improved price management, decent membership trends, and increasing penetration of the e-commerce business have been contributing to its performance. In the reported quarter, the company’s comparable e-commerce sales rose 12.5% year over year. Excluding the effect of gasoline prices and foreign exchange, the same exhibited an improvement of 12.6% year over year.
Costco Wholesale Corporation Price, Consensus and EPS Surprise
Costco’s net sales grew 16.1% year over year to $50,937 million, while membership fees increased 9.8% to $967 million in the reported quarter. Comparable sales climbed 14.4% from the prior-year quarter, reflecting an improvement of 15.8%, 16% and 6.2% in the United States, Canada, and Other International locations, respectively. We note that traffic or shopping frequency rose 9.3% globally and 8.3% in the United States. Average transaction or ticket was up 4.6% globally and 6.9% in the United States.
Excluding the impact of foreign currency fluctuations and gasoline prices, the company witnessed comparable sales growth of 11.1% in the quarter. The United States, Canada and Other International locations registered a comparable sales increase of 11.3%, 12.4%, and 9%, respectively.
Operating income in the quarter increased 35.2% year over year to $1,812 million, while operating margin (as a percentage of total revenues) expanded 50 basis points to 3.5%.
Store Update
Costco currently operates 828 warehouses — 572 in the United States and Puerto Rico, 105 in Canada, 40 in Mexico, 30 in Japan, 29 in the U.K., 16 in Korea, 14 in Taiwan, 13 in Australia, four in Spain, two each in France and China and one in Iceland.
During the quarter under discussion, Costco opened five units. For fiscal 2022, the company plans to have 32 new units, including four relocations.
Financial Aspects
Costco ended the reported quarter with cash and cash equivalents of $11,819 million and long-term debt (excluding the current portion) of $6,658 million. The company’s shareholders’ equity was $19,418 million, excluding non-controlling interests of $558 million. Management incurred capital expenditures of $723 million during the second quarter. The company projected capital expenditures of approximately $4 billion for fiscal 2022.
Shares of this Zacks Rank #3 (Hold) company have gained 15.3% in the past six months compared with the industry’s rally of 1.9%.
3 Picks You Can’t Miss Out On
We have highlighted three better-ranked stocks, namely, Boot Barn Holdings (BOOT - Free Report) , Tractor Supply Company (TSCO - Free Report) and Sprouts Farmers Market (SFM - Free Report) .
Boot Barn Holdings, the lifestyle retailer of western and work-related footwear, apparel and accessories, sports a Zacks Rank #1 (Strong Buy). The company has an expected EPS growth rate of 20% for three-five years. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Boot Barn Holdings’ current financial year sales and EPS suggests growth of 62.6% and 220.8%, respectively, from the year-ago period.
Tractor Supply Company, a rural lifestyle retailer in the United States, carries a Zacks Rank #2 (Buy). The company has an expected EPS growth rate of 9.8% for three-five years.
The Zacks Consensus Estimate for Tractor Supply Company’s current financial year sales and EPS suggests growth of 8.2% and 8%, respectively, from the year-ago period. TSCO has a trailing four-quarter earnings surprise of 22%, on average.
Sprouts Farmers, which offers fresh, natural, and organic food products, carries a Zacks Rank #2. The company has an expected EPS growth rate of 7.3% for three-five years.
The Zacks Consensus Estimate for Sprouts Farmers’ current financial year sales and EPS suggests growth of 4.7% and 4.8%, respectively, from the year-ago period. SFM has a trailing four-quarter earnings surprise of 17.9%, on average.
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Costco's (COST) Q2 Earnings Top Estimates, Comps Up 14.4% Y/Y
Costco Wholesale Corporation (COST - Free Report) came out with decent second-quarter fiscal 2022 results, wherein both the top and the bottom lines not only surpassed the Zacks Consensus Estimate but also improved year over year. The quarter marked the fourth straight earnings beat. This operator of membership warehouses maintained its impressive comparable sales run. The company’s e-commerce sales also continued to showcase strength. However, supply chain bottlenecks and higher labor and freight costs remain concerns.
Q2 Earnings & Sales Picture
Costco posted quarterly earnings of $2.92 per share that handily beat the Zacks Consensus Estimate of $2.69, and rose from $2.14 reported in the year-ago period. The year-over-year increase in the bottom line can be attributed to higher revenues.
Total revenues, which include net sales and membership fees, were $51,904 million, up 15.9% from the prior-year quarter. The metric surpassed the Zacks Consensus Estimate of $51,305 million.
Costco’s growth strategies, improved price management, decent membership trends, and increasing penetration of the e-commerce business have been contributing to its performance. In the reported quarter, the company’s comparable e-commerce sales rose 12.5% year over year. Excluding the effect of gasoline prices and foreign exchange, the same exhibited an improvement of 12.6% year over year.
Costco Wholesale Corporation Price, Consensus and EPS Surprise
Costco Wholesale Corporation price-consensus-eps-surprise-chart | Costco Wholesale Corporation Quote
Delving Deeper
Costco’s net sales grew 16.1% year over year to $50,937 million, while membership fees increased 9.8% to $967 million in the reported quarter. Comparable sales climbed 14.4% from the prior-year quarter, reflecting an improvement of 15.8%, 16% and 6.2% in the United States, Canada, and Other International locations, respectively. We note that traffic or shopping frequency rose 9.3% globally and 8.3% in the United States. Average transaction or ticket was up 4.6% globally and 6.9% in the United States.
Excluding the impact of foreign currency fluctuations and gasoline prices, the company witnessed comparable sales growth of 11.1% in the quarter. The United States, Canada and Other International locations registered a comparable sales increase of 11.3%, 12.4%, and 9%, respectively.
Operating income in the quarter increased 35.2% year over year to $1,812 million, while operating margin (as a percentage of total revenues) expanded 50 basis points to 3.5%.
Store Update
Costco currently operates 828 warehouses — 572 in the United States and Puerto Rico, 105 in Canada, 40 in Mexico, 30 in Japan, 29 in the U.K., 16 in Korea, 14 in Taiwan, 13 in Australia, four in Spain, two each in France and China and one in Iceland.
During the quarter under discussion, Costco opened five units. For fiscal 2022, the company plans to have 32 new units, including four relocations.
Financial Aspects
Costco ended the reported quarter with cash and cash equivalents of $11,819 million and long-term debt (excluding the current portion) of $6,658 million. The company’s shareholders’ equity was $19,418 million, excluding non-controlling interests of $558 million. Management incurred capital expenditures of $723 million during the second quarter. The company projected capital expenditures of approximately $4 billion for fiscal 2022.
Shares of this Zacks Rank #3 (Hold) company have gained 15.3% in the past six months compared with the industry’s rally of 1.9%.
3 Picks You Can’t Miss Out On
We have highlighted three better-ranked stocks, namely, Boot Barn Holdings (BOOT - Free Report) , Tractor Supply Company (TSCO - Free Report) and Sprouts Farmers Market (SFM - Free Report) .
Boot Barn Holdings, the lifestyle retailer of western and work-related footwear, apparel and accessories, sports a Zacks Rank #1 (Strong Buy). The company has an expected EPS growth rate of 20% for three-five years. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Boot Barn Holdings’ current financial year sales and EPS suggests growth of 62.6% and 220.8%, respectively, from the year-ago period.
Tractor Supply Company, a rural lifestyle retailer in the United States, carries a Zacks Rank #2 (Buy). The company has an expected EPS growth rate of 9.8% for three-five years.
The Zacks Consensus Estimate for Tractor Supply Company’s current financial year sales and EPS suggests growth of 8.2% and 8%, respectively, from the year-ago period. TSCO has a trailing four-quarter earnings surprise of 22%, on average.
Sprouts Farmers, which offers fresh, natural, and organic food products, carries a Zacks Rank #2. The company has an expected EPS growth rate of 7.3% for three-five years.
The Zacks Consensus Estimate for Sprouts Farmers’ current financial year sales and EPS suggests growth of 4.7% and 4.8%, respectively, from the year-ago period. SFM has a trailing four-quarter earnings surprise of 17.9%, on average.