Costco Fourth Quarter Earnings Sneak Peek

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S&P 500 (NYSE:SPY) component Costco Wholesale (NASDAQ:COST) will unveil its latest earnings on Wednesday, October 10, 2012. Costco Wholesale operates membership warehouses that offer a selection of nationally branded and selected private-label products in categories such as food, appliances, and sporting goods, at low prices.

Costco Wholesale Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average estimate of analysts is for net income of $1.30 per share, a rise of 20.4% from the company’s actual earnings for the same quarter a year ago. During the past three months, the average estimate has moved up from $1.29. Between one and three months ago, the average estimate moved up. It has been unchanged at $1.30 during the last month. Analysts are projecting profit to rise by 17% versus last year to $3.86.

Past Earnings Performance: The company fell in line with estimates last quarter after topping forecasts the quarter before. After coming in above the mean estimate by 2 cents in the second quarter, the company fell in line with expectations by reporting profit of 88 cents per share last quarter.

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A Look Back: In the third quarter, profit rose 19.1% to $386 million (88 cents a share) from $324 million (73 cents a share) the year earlier, meeting analyst expectations. Revenue rose 8.2% to $22.32 billion from $20.62 billion.

Wall St. Revenue Expectations: On average, analysts predict $31.59 billion in revenue this quarter, a rise of 12.1% from the year-ago quarter. Analysts are forecasting total revenue of $98.52 billion for the year, a rise of 10.8% from last year’s revenue of $88.92 billion.

Stock Price Performance: Between July 11, 2012 and October 4, 2012, the stock price rose $6.98 (7.4%), from $94.50 to $101.48. The stock price saw one of its best stretches over the last year between March 6, 2012 and March 15, 2012, when shares rose for eight straight days, increasing 4.4% (+$3.88) over that span. It saw one of its worst periods between April 27, 2012 and May 9, 2012 when shares fell for nine straight days, dropping 6.8% (-$6.07) over that span.

Key Stats:

After experiencing income increases the last three quarters, the company is hoping to keep the good news coming with this earnings announcement. Net income rose 2.6% in the first quarter and 13.2% in the second quarter before increasing again in the third quarter.

On the top line, the company is looking to build on four-straight revenue increases heading into this earnings announcement. Revenue rose 16.8% in the fourth quarter of the last fiscal year, 12.4% in the first quarter and 10% in the second quarter before increasing again in the third quarter.

Analyst Ratings: There are 12 out of 22 analysts surveyed (54.5%) rating Costco Wholesale a buy.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 1.18 last quarter. The current ratio is an indication of a firm’s liquidity and ability to meet creditor demands and generally, for every dollar the company owes in the short term, it has that figure available in assets that can be converted to cash in the short term.

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(Company fundamentals by Xignite Financials. Earnings estimates provided by Zacks)

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