{"id":65642,"date":"2023-09-26T11:52:36","date_gmt":"2023-09-26T15:52:36","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/what-to-expect-from-costcos-stock-post-q4-results\/"},"modified":"2023-09-26T11:52:39","modified_gmt":"2023-09-26T15:52:39","slug":"what-to-expect-from-costcos-stock-post-q4-results","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=65642","title":{"rendered":"What To Expect From Costco\u2019s Stock Post Q4 Results?"},"content":{"rendered":"<div>\n[Note: Costco\u2019s fiscal year ends in August]\n<p>Costco (NASDAQ: COST) is scheduled to report its fiscal fourth-quarter results on Tuesday, September 26. We expect Costco stock to likely see little movement due to revenue slightly beating expectations and earnings coming in line. It is worth pointing out that despite the pandemic and inflation, the business has managed to grow. Consumers loaded up on essentials in high quantities to keep costs low. Costco stands out from other retailers as it makes a majority of its profits from its membership income, so comparable sales growth isn\u2019t as important for it as it is for other retailers. In Q3, membership fee income was 6% higher than the prior-year period. Card members increased by 7% over last year in the third quarter and the renewal rate remained strong, at 92.6% in the U.S. and Canada. This high renewal rate not only ensures a steady stream of revenue from membership fees but also increases the lifetime value of each customer. We need to keep an eye on this metric when calculating Costco\u2019s long-term growth potential. Also, Costco currently boasts nearly $14 billion in cash, cash equivalents, and short-term investments. Its long-term debt is only $6.5 billion, so Costco has a net cash position on its balance sheet. That said, the retailer\u2019s consistent performance at driving revenue coupled with its dedication to enhancing customer experience, reflects its ability to thrive in the ever-changing retail landscape.<\/p>\n<p>Our forecast indicates that Costco\u2019s valuation is $564 a share, which is almost in line with the current market price. Look at our interactive dashboard analysis on <strong data-ga-track=\"ExternalLink:https:\/\/www.trefis.com\/data\/companies\/COST\/no-login-required\/uJlKgxz8\/Costco-COST-FY-2023Q4-Earnings-Preview-COST-Stock-Likely-To-See-Little-Movement-Due-To-Revenues-Growing-Slightly-Ahead-of-Expectations-And-Earnings-Coming-In-Line?fromforbesandarticle=trefis230926\">Costco\u2019s Earnings Preview:<\/strong><strong> What To Expect in Fiscal Q4? <\/strong>for more details.<\/p>\n<p>Notably, COST stock had a Sharpe Ratio of 0.9 since early 2017, which is higher than the figure of 0.6 for the S&amp;P 500 Index over the same period. Compare this with the <strong>Sharpe of 1.2<\/strong> for the Trefis Reinforced Value portfolio. Sharpe is a measure of return per unit of risk, and high-performance portfolios can provide the best of both worlds.<\/p>\n<p><fbs-ad position=\"inread\" progressive=\"\" ad-id=\"article-0-inread\" aria-hidden=\"true\" role=\"presentation\"><\/fbs-ad><\/p>\n<p><strong>(1) Revenues expected to be slightly ahead of consensus estimates<\/strong><\/p>\n<p>Trefis estimates COST\u2019s FQ4 2023 revenues to be $78.5 Bil, marginally higher than the consensus estimate. In Q3, Costco\u2019s revenues grew 2% year-over-year (y-o-y) to $53.6 billion. Costco showed weaker than usual year-over-year comp store sales growth in Q3 at just 0.3%. This was driven by weakening demand for high-ticket discretionary items, thus lowering the average ticket, which dropped 4.3% y-o-y. The lower average ticket was offset by higher traffic volumes which grew 4.8% y-o-y. For the full-year 2023, we expect Costco\u2019s Revenues to grow 7% y-o-y to $241.8 billion.<\/p>\n<p><strong>(2) EPS likely to match consensus estimates<\/strong><\/p>\n<p>COST\u2019s FQ4 2023 earnings per share is expected to be $4.77 per Trefis analysis, almost matching the consensus estimate. In the third quarter, Costco\u2019s earnings per share fell from $3.04 last year to $2.93 this year, due to supply chain pressure.<\/p>\n<p>A membership fee increase is unlikely this year because of high inflation, but it will happen sooner rather than later. Costco generally raises its membership fees every five years, last raised in 2017. This should help the company boost its bottom line further.<\/p>\n<p><strong>(3) Stock price estimate in line with the current market price<\/strong><\/p>\n<p>Going by Costco\u2019s valuation, with an EPS estimate of around $14.08 and a P\/E multiple of 40.0x in fiscal 2023, this translates into a price of $564, which is almost in line with the current market price. Costco\u2019s ability to generate higher sales consistently, as well as turn them into profits, has impressed investors, and this has led to an elevated P\/E as compared with its peers even before the pandemic when it hovered around 30x.<\/p>\n<p>It is helpful to see how its peers stack up. COST Peers shows how Costco\u2019s stock compares against peers on metrics that matter. You will find other useful comparisons for companies across industries at Peer Comparisons.<\/p>\n<p>Invest with <strong>Trefis <\/strong><strong data-ga-track=\"ExternalLink:https:\/\/dashboards.trefis.com\/data\/companies\/PORTFOLIOS\/no-login-required\/M7MacZNG?fromforbes\">Market Beating Portfolios<\/strong><\/p>\n<p>See all <strong>Trefis <\/strong><strong data-ga-track=\"ExternalLink:https:\/\/dashboards.trefis.com\/data\/price-estimates?fromforbes\">Price Estimates<\/strong><\/p>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.forbes.com\/sites\/greatspeculations\/2023\/09\/26\/what-to-expect-from-costcos-stock-post-q4-results\/\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>[Note: Costco\u2019s fiscal year ends in August] Costco (NASDAQ: COST) is scheduled to report its fiscal fourth-quarter results on Tuesday, September 26. We expect Costco stock to likely see little movement due to revenue slightly beating expectations and earnings coming in line. It is worth pointing out that despite the pandemic and inflation, the business [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":65643,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-65642","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-markets","tag-featured"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What To Expect From Costco\u2019s Stock Post Q4 Results? | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Costco (NASDAQ: COST) is scheduled to report its fiscal fourth-quarter results on Tuesday, September 26. 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