Costco Wholesale Corporation COST is slated to report first-quarter fiscal 2016 results on Dec 8. The big question facing investors now is, whether the company will be able to continue with its positive earnings surprise streak in the quarter to be reported. In the trailing four quarters, Costco outperformed the Zacks Consensus Estimate by an average of 6%. In the preceding quarter, the company delivered a positive earnings surprise of 4.2%. Let’s see how things are shaping up for this announcement.
Zacks Model Shows Likely Earnings Beat
Our proven model shows that Costco is likely to beat earnings estimates this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. The Most Accurate estimate stands at $1.18 and the Zacks Consensus Estimate is pegged at $1.17. So the ensuing +0.86% ESP and the company’s Zacks Rank #3 (Hold) make us reasonably confident of an earnings beat.
Factors Influencing this Quarter
We believe that Costco continues to be a dominant retail wholesaler based on its breadth and quality of merchandise offered. The company’s strategy to sell products at heavily discounted prices has helped it to remain on a growth track as cash-strapped customers continue to reckon Costco as a viable option for low-cost necessities. A differentiated product range enables the company to ensure an upscale shopping experience for its members, resulting in market share gains and higher sales per square foot. Moreover, Costco continues to maintain healthy membership renewal rate. The company is also gradually expanding its E-commerce capabilities in the U.S., Canada, U.K. and Mexico. Together, these factors may have a favorable impact on the upcoming results.
Stocks Poised to Beat Earnings Estimates
Here are some other companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Casey's General Stores Inc. CASY has an Earnings ESP of +7.79% and a Zacks Rank #1 (Strong Buy).
CarMax Inc. KMX has an Earnings ESP of +1.45% and a Zacks Rank #2 (Buy).
Francesca's Holdings Corporation FRAN has an Earnings ESP of +6.67% and a Zacks Rank #3.
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