Why It's A Bad Day For Costco To Report Q4 Earnings

There are good days and bad days to be announcing earnings. When the market is good, investors are in buying mode. When the market has a bad day, investors do not have the same appetite for risk. As of Thursday afternoon, the markets are leaning to the downside.

Unfortunately for Costco Wholesale Corporation COST, the retailer is due to report fourth-quarter earnings after the close. The price action in the issue ahead of the report makes it the PreMarket Prep Stock of the Day.

9 Bad Days For Costco: Along with the S&P 500 index, Costco reached an interim high on Sept. 12 at $542.60. Similar to the index, it has been crushed. It ended Wednesday’s session at $493.07 and is under extreme selling pressure in Thursday’s session.

Costco's Impressive Earnings Streak: For EPS, the issue has only missed estimates in two of the last 15 quarters going back to the second quarter of 2019. The company has only come up shy on three occasions by minimal amounts on the revenue front.

Expectations are high for the company going into the report, as both the EPS estimate of $4.16 and revenues of $72.06 billion would far exceed previous quarters.

Technical Take On Costco: During the always popular ticker time segment of the PreMarket Prep show, the issue was analyzed for the upcoming session.

When the issue was covered on the show, it was in the green by nearly $3 at the $296 area. It should be noted the S&P 500 index futures were trading higher as well at the time of the analysis.

The author of this article was not confident Costco would come near Wednesday’s high ($506.43), which is where the issue stalled last Friday and on Monday. Investors were alerted to potential support at the pair of lows from Tuesday ($493.42) and Wednesday ($493).

If that level was breached, the next daily support level does not come in until its July 13 low ($483.82)

Costco Goes From Green To Red: Just as the stock index futures began to decline Thursday, so did the shares of Costco.

Costco still managed a higher open, but that was the exact high for the session.

The ensuing decline has found intraday support ahead of the aforementioned low, only reaching $484.81. Costco shares were down 1.46% at $485.90 in Thursday afternoon trading. 

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