PreMarket Prep Stock Of The Day: Costco

Geopolitical tensions are taking precedence over just about everything else, and that means most days in recent weeks have not been good days for companies to report. 

A victim of this negative atmosphere is Costco Wholesale Corp COST, which is the PreMarket Prep Stock of the Day.

Costco's Pre-Earnings Rally: Under normal circumstances, issues that have a strong long-term uptrend will rally into an upcoming earnings report. The reason: the company will continue to beat estimates and continue to move higher.

Despite the rocky investing environment over the last week or so, Costco held true to form and had a nice rally. The issue bottomed on the same day as the S&P 500 index on Thursday, Feb. 24 at $482.98.

The issue peaked on Thursday, March 3, the same day the index had its high for the rebound at $538.96 and retreated to end the session at $533.05, which was also the closing high for the recent rally.

Costco's Q2 Report: After the close on Thursday, the company reported quarterly earnings of $2.92 per share, which beat the analyst consensus estimate of $2.73 by 6.96%. This is a 36.45% increase over earnings of $2.14 per share from the same period last year.

The company reported quarterly sales of $51.9 billion, which beat the analyst consensus estimate of $51.37 billion by 1.03%. This is a 15.93% increase over sales of $44.77 billion in the same period last year.

After-Hours Costco Price Action: Off the headline number, the algos went into a buying frenzy and took the issue to $547.99, which is $9 over the session high. In a case of too much too fast, profit takers came in and the issue ended the after-hours session at $517.55.

A negative headline out of Ukraine, with a nuclear power plant being fired upon, certainly added to any selling pressure in the issue.

PreMarket Prep's Take On Costco: When the issue was being covered on the show Friday, it was trading at the $523 area, in the red by $10. The author of the article noted the big run-up ahead of the report and was not looking to go long on the issue in the upcoming session.

Instead, investors were alerted to the importance of the $520 area. The reason being: a pair of lows from Tuesday ($519.99) and Wednesday ($519.77). If the level was breached, there was no daily support level until Monday’s low ($311.30).

COST Price Action: After a lower opening, the issue attempted to rally but cut came up well shy of the bottom of Thursday’s range ($529.54), only reaching $524.67 and resuming its move lower.

The stock is down 2.57% at $519.35 late Friday morning. 

The discussion on the issue from Friday’s show can be found here: