Should Costco Stock Be in Your Portfolio Pre-Q3 Earnings?

Core Viewpoint - Costco Wholesale Corporation is preparing to release its third-quarter fiscal 2025 earnings results, with investors weighing the decision to buy or hold the stock based on earnings expectations and market conditions [1] Financial Performance Expectations - Analysts project third-quarter revenues to reach $63.1 billion, reflecting a 7.9$4.25, indicating a 12.4% year-over-year growth [3] - The company has a trailing four-quarter earnings surprise average of 0.8%, although it missed the Zacks Consensus Estimate by 1.7% in the last quarter [4] Growth Strategies and Market Position - Costco's strategic investments, customer-centric approach, and focus on membership growth have contributed to its resilience as a consumer defensive stock [2] - The company’s competitive pricing and bulk purchasing power enable it to maintain low prices, which is expected to drive comparable sales growth of 4.7% in the third quarter [8] - High membership renewal rates, exceeding 90%, provide a stable revenue source, with membership fees anticipated to increase by 9.6% during the quarter [9] E-commerce and Expansion - Costco's adaptability in product offerings and continuous expansion into new markets, including e-commerce growth projected at 21%, positions it well for future success [10] Valuation and Market Comparison - Costco's forward 12-month price-to-earnings (P/E) ratio is 52.28, significantly higher than the industry average of 33.09 and the S&P 500's 21.36, indicating a premium valuation [13] - The stock has outperformed competitors, with a 24% increase in price over the past year, compared to declines in competitors like Dollar General and Target [12] Investment Considerations - Despite its premium valuation, Costco's strong financial health and strategic initiatives suggest potential for further upside, making it a compelling choice for growth-oriented investors [18]