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Costco Wholesale Corporation (COST - Free Report) is likely to register an increase in the top line when it reports fourth-quarter fiscal 2023 results on Sep 26 after the closing bell. The Zacks Consensus Estimate for revenues is pegged at $78.56 billion, indicating a growth of 9% from the prior-year reported figure.

The bottom line of this Issaquah, WA-based company is anticipated to have improved year over year. Although the Zacks Consensus Estimate for fourth-quarter earnings per share has declined by a penny to $4.71 over the past 30 days, the figure still suggests an increase of 12.1% from the year-ago period.

Costco has a trailing four-quarter earnings surprise of 1.8%, on average. In the last reported quarter, the company’s bottom line outperformed the Zacks Consensus Estimate by 3.3%.
 

Key Factors to Note

Costco’s growth strategies, better price management, and decent membership trends have been contributing to its performance. The company’s strategy to sell products at discounted prices has helped attract customers who have been seeking both value and convenience. These factors, complemented by reduced supply-chain costs and an increasing penetration of private-label brands, are expected to have a positive impact on the overall results.

For the quarter in focus, we anticipate an impressive 7.9% jump in net sales and a notable 6.1% increase in total membership fees. Costco's paid membership base has been on a steady ascent, driven by a growing customer base and remarkable renewal rates. We also project 0.7% growth in comparable sales for the fourth quarter.

However, it is essential to acknowledge the presence of certain headwinds, including inflationary pressures and a high-interest-rate environment, which may pose challenges. Additionally, margins remain a critical area to monitor, with potential concerns stemming from any deleverage in the SG&A rate, higher labor and occupancy costs, and increased marketing and other store-related expenses. We expect SG&A expenses, as a percentage of total revenues, to deleverage 50 basis points to 8.9%.
 

Costco Wholesale Corporation Price, Consensus, and EPS Surprise

Costco Wholesale Corporation price-consensus-eps-surprise-chart | Costco Wholesale Corporation Quote
 

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Costco this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat. However, that’s not the case here.

Costco has a Zacks Rank #3 but an Earnings ESP of -1.79%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

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