Costco (COST) Q2 Earnings Preview

Shares of Costco (NASDAQ:COST) slipped marginally during regular trading hours Wednesday, just a day before the discount grocery giant is set to report its fiscal second quarter financial results. This means it is time for a last-minute Costco earnings preview.

Overview

Costco 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 for smaller orders. Costco has also expanded its same-day delivery service to “most” metropolitan areas through its Instacart partnership. These moves were made to help make the discount retailer more competitive in the e-commerce age as its peers, such as Kroger (NYSE:KR) , Walmart (NYSE:WMT) , and Target (NYSE:TGT) , all roll out similar offerings.

Yet Costco has stood out from its rivals in terms of its digital expansion and experience. The firm overtook Amazon’s (NASDAQ:AMZN) spot as the number one internet retailer in terms of customer satisfaction in 2018, according to the American Customer Satisfaction Index. The big-box giant scored an 83 in its first year in the internet retail category to top Amazon’s 82 and dethrone the e-commerce giant’s nearly decade-long streak at the top.

On top of that, 90% of Costco members reportedly renew their subscriptions. Shares of COST dipped 0.27% on Wednesday to close regular trading at $219.23. This marked over a 10% downturn from Costco’s 52-week high of $245.16 and gives the stock some room to run if it can impress investors Thursday.

Q2 Outlook & Earnings Trends

Before we look at what to expect from the retailer, investors should note that Costco reports its monthly sales figures throughout the year. With that said, Costco’s January net sales jumped 8% to $10.71 billion. Plus, COST’s U.S. comparable sales popped 6.6% and its e-commerce comps jumped 22.1% for the month.

Overall, Costco’s quarterly revenues are projected to jump 8.05% from the year-ago period to reach $35.65 billion, based on our current Zacks Consensus Estimate. This figure includes Costco’s membership fees. Meanwhile, Costco’s adjusted quarterly earnings are expected to surge 17.5% to hit $1.67 a share.

Costco’s earnings estimate revision activity has been mixed over the last 30 days. However, the last week has seen COST’s second-quarter consensus earnings estimate dip by $0.01 a share.

Costco is scheduled to release its Q2 fiscal 2019 financial results after the closing bell Thursday. So, make sure to head back to Zacks for a complete breakdown of Costco’s actual quarterly metrics.

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