Costco Q3 Earnings Preview: Analyst Estimates, Foot Traffic Data, Membership Fee Increase Eyed By Investors

Retail company Costco Wholesale Corporation COST is set to report third-quarter financial results after market close on Thursday, May 30.

Here are the earnings estimates, what analysts are saying and key items to watch.

Earning Estimates: Analysts expect Costco to report third-quarter revenue of $58.07 billion, according to data from Benzinga Pro.

The company reported revenue of $53.65 billion in last year's third quarter. Costco has beaten analysts' estimates for revenue in two of the last five quarters.

Analysts expect Costco to report third-quarter earnings per share of $3.70, compared to $3.43 in last year's third quarter. The company has beaten analysts' estimates in the last five straight quarters.

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What Analysts Are Saying: A shift in consumer spending habits at retailers could benefit Costco, according to Stifel analyst Mark Astrachan.

Survey results show consumers earning less than $100,000 a year have increased shopping intentions at Costco and Walmart.

"Spending intentions continue to improve amongst those earning less than $75,000/year, though we think they are shifting where and what they are purchasing, including increasing spend on private label and favoring larger retailers," Astrachan said.

The analyst has a Buy rating on Costco and a Hold rating on Walmart. But he prefers Costco in the retail sector.

Here are other recent analyst ratings on Costco and their price targets.

• Argus Research: Buy rating, raised price target from $805 to $900
• Oppenheimer: Outperform rating, raised price target from $805 to $850
• Evercore ISI: Outperform rating, raised price target from $810 to $820
• Telsey: Outperform rating, $800 price target
• Citigroup: Neutral rating, raised price target from $630 to $710.

See Also: Costco Hires New CFO, But Don’t Expect $1.50 Hot Dog Combo Price To Change

Key Items to Watch: The Costco report comes after Walmart’s results were well received by investors. The quarterly results from Target were not.

The quarterly results could show Costco taking market share from other retailers.

Costco has reported its monthly sales for February, March and April at $18.21 billion, $23.48 billion and $19.80 billion, which were up 6.9%, 9.4% and 7.1% respectively on a year-over-year basis.

Foot traffic data from Placer.ai shows Costco as one of the biggest gainers in the retail sector in the first calendar quarter of 2024, which will cover a portion of the company's fiscal third quarter.

Placer.ai data shows visits up 10.9% in February, up 10.5% in March and up 9.2% in April on a year-over-year basis.

Similar to other quarters, a key topic watched by investors and analysts will be a membership fee increase. Costco hinted that this is coming in the future, but didn't pull the trigger in the second quarter. The company last hiked its membership fee in 2017 and has raised the fee every five to six years on average.

A fee increase would likely lead to increased optimism from investors and analysts as membership fees are high-margin revenue for the company.

COST Price Action: Costco shares trade at $80.8.61 versus a 52-week trading range of $490.94 to $816.87. Costco stock is up 63% over the last year and up 23% year-to-date in 2024.

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