Shares of Costco (COST - Free Report) popped 0.57% during regular trading hours Wednesday just one day before the discount grocery powerhouse is set to release its quarterly financial results. Fellow industry giants Kroger (KR - Free Report) and Walmart (WMT - Free Report) both reported solid results earlier this quarter, so let’s see what to expect from Costco Thursday.
Costco has successfully adapted to the Amazon (AMZN - Free Report) -driven retail age. The company 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 to smaller orders. Costco also expanded its same-day delivery service to “most metropolitan” areas through an updated partnership with Instacart.
Costco, like some other retailers, reports its monthly sales throughout the year. The company’s net sales jumped 10.3% to reach $34.31 billion for the first 12 weeks of its current fiscal year. Plus, the firm’s e-commerce sales soared 32.3%. Investors should also note that our current Zacks Consensus Estimate calls for Costco’s quarterly revenues to climb roughly 8.9% to touch $34.63 billion, which includes the firm’s membership fees.
Meanwhile, Costco’s adjusted quarterly earnings are expected to jump 18.4% to hit $1.61 per share. On top of that, we need to know how likely it is that the grocery giant tops our quarterly earnings estimate since this could help determine how COST stock trades in the short-term.
Luckily, we can turn to our exclusive Earnings ESP figure to help us. The Zacks Earnings ESP (Expected Surprise Prediction) compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter. The Most Accurate Estimate is a version of the Zacks Consensus whose definition is related to change.
This is done because, generally speaking, when an analyst posts an estimate right before an earnings release, it means that they have fresh information which could potentially be more accurate than what analysts thought about a company two or three months ago.
A positive Earnings ESP paired with a Zacks Rank #3 (Hold) or better ranking helps us feel confident about the potential for an earnings beat. In fact, our 10-year backtest has revealed that this methodology has accurately produced a positive surprise 70% of the time.
Costco is currently a Zacks Rank #3 (Hold) and sports an Earnings ESP of +0.09%. Therefore, investors can regard Costco as a company that could top our quarterly earnings estimate.
Costco is scheduled to report its fiscal Q1 2019 financial results after the closing bell Thursday.
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