Costco Wholesale (COST) More Upside If Sales Turns Out Better Than Last Quarter

Costco is expected to report a 8.2% increase in revenue to $58.036 billion from $53.65 billion a year ago, (Majority is on Total Revenue basis which includes Membership Fees). Earnings per share is estimated to be around $3.70.

Currently, we are seeing an uptrend in technicals on COST, but we saw similar upward trend prior to earnings in its last earnings on 07 Mar, where it suffer a Gap down after the earnings per share cames in at 3.71, higher than estimate, but their sales miss estimates.

So this upcoming earnings, we would need to look at the sales numbers.

COST last reported earnings on March 07, 2024 after the market close (AMC). COST shares declined -7.6% the day following the earnings announcement to close at 724.40. Following its earnings release, 83 days ago, COST stock has drifted +12.3% higher.

From the time it announced earnings, COST traded in a range between 696.15 and 816.87. The last price (813.17) is closer to the higher end of range.

Implied straddle for upcoming earnings is 4.2%. Based on some of the earnings we saw from retailers, like Home Depot and Walmart, we can see that Walmart have sales increased for Q1 2024 when they reported earnings earlier.

So could we be seeing higher sales and earnings per share coming from COST?

We could see COST making a very nice upside as the buying strength keep growing, we could see that traders and investors are pretty optimistic on this stock.

Based on how the consumer sentiment released for May, we could see that confidence ticks up after three straight declines but consumers remain anxious about the future due to inflation concerns.

We might see more investors confidence if COST sales volume is much better than the last earnings.

If we looked at another indicator, KDJ, we could discover that the last BUY signal or opportunity was in April for COST, and though there was a nice upside after that, we do not really see selling pressure.

And the most recent one week before COST 30 May earnings, we could see that KDJ lines converge and remain flat, so I believe investors might be adopting a wait and see attitude as consumer sentiment play a role in its sales volume.

Based on how Costco stock price have been affected by its sales figure, this earnings, focus would be on whether Costco sales number could be better than before. With peer retailer like Walmart having reported an increase in the same stores sales, I would think Costco could give a rather decent sales number.

Appreciate if you could share your thoughts in the comment section whether you think Costco would recover from its previous low sales in this quarter?

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.