Costco (COST) Earnings Preview: Consumers Loyal, Stock Still Down

Core Viewpoint - Costco is expected to report earnings after the market close, with shares under pressure, having hit a 52-week low and down nearly 5% year-to-date. The anticipated adjusted EPS is $4.26 on revenues of approximately $67.33 billion, reflecting an 8% year-over-year increase [1][3]. Financial Performance - Analysts expect Costco to maintain strong performance despite recent stock declines, with the holiday quarter typically being robust for the company. The expected EPS of $4.26 and revenue of $67.33 billion indicate growth compared to the previous year [3][4]. - November comp sales growth was reported at 8%, with U.S. comp sales up 7%, Canada up 7%, and international markets up 11.4%. This growth suggests that consumer spending remains strong at Costco [5][6]. Market Sentiment - There is a slightly bullish sentiment among analysts, with 11 upward revisions to EPS estimates in the last three months compared to seven downward revisions, indicating confidence in Costco's upcoming earnings report [10][11]. - Despite the positive outlook, concerns exist regarding the company's stock performance, which is the worst in over two decades, leading to speculation that a special dividend may be suspended due to ongoing legal issues and stock performance [8][9]. Consumer Behavior - Consumers are reportedly continuing to shop at Costco, seeking lower prices even amid tighter budgets. This trend is expected to support Costco's sales during the holiday season [4][11]. - The company has a high membership renewal rate of 90%, indicating strong brand loyalty among its customers, which could serve as a catalyst for future growth if membership fees are increased [14].