Costco share price up 5% despite Q2 earnings revenue miss

Costco stock is up after a mixed Q2 earnings report.

Trader looking at data after Costco Q2 results Source: Bloomberg

Costco Wholesale Corporation share price may fall after a mixed Q2 revenue report. Costco’s Q2 results had high earnings per share, but the warehouse retailer had slightly worse-than-expected revenue.

Costco results: key figures

Earnings per share $2.01
Revenue $35.4 billion
Net income $889 million
Membership revenue $788 million
US same-store sales +6.7%

Costco stock up 5% as earnings revenue misses estimates

Costco’s Q2 revenue was $35.4 billion, missing projections of $35.65 billion. The company blamed bad weather in the US in February for decreased sales.

‘February’s sales were negatively impacted approximately 1% by weather throughout the US,’ said Costco in a statement.

While the revenue was below expectations, the retailer’s other key figures increased. Costco’s Q2 results were mostly positive as EPS was $2.01, surpassing the $1.89 expected from Wall Street.

The retailer’s same-store sales increased by 2.7% and net income reached $889 million. The members-only store saw new customer amounts increase by 7%, as membership revenue grew to $788 million. The chain also had high e-commerce sales with its online sales rising 25.5%.

Chief executive officer, (CEO), Richard Galanti, noted Costco’s success in grocery sales, especially organic food.

‘I think we've done a great job and we continue to do a great job particularly in fresh food organics where there's a little less pricing pressure and some competitive pressure,’ said Galanti.

What do Costco’s Q2 results mean for their share price?

Costco’s Q2 results mean that the share price may decrease. Costco's share price could further rise despite the earnings revenue miss because of its high EPS and strong online sales.

How do Costco’s Q2 results compare to other retailers?

Costco’s Q2 results are weaker than other retailers like Walmart. Costco’s Q2 revenue was weaker-than-expected, while Walmart’s Q4 revenue grew after strong sales from its own warehouse retailer, Sam’s Club.

What is Costco’s dividend yield?

Costco’s special unscheduled dividend won’t be available until possibly August. Analysts project Costco’s Q3 earnings per share of $1.86.

Costco thrives despite Amazon competition

Costco Q2 results show that the warehouse retailer can grow despite the rise of online grocery delivery from Amazon. Garrett Nelson, CFRA Research analyst, noted that Costco has strong sales now, but could face competition from a physical Amazon grocery store.

‘We see the [Costco’s] shares' valuation being maintained by relatively strong near-term sales growth trends. However, we think increased competition from low-cost grocers represent significant risks in the coming quarters,’ said Nelson.


This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

Seize a share opportunity today

Go long or short on thousands of international stocks.

  • Increase your market exposure with leverage
  • Get spreads from just 0.1% on major global shares
  • Trade CFDs straight into order books with direct market access

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
Bid
Offer
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Bid
Offer
Updated
Change
Bid
Offer
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
China 300
-
-
-
-

Prices above are subject to our website terms and agreements. All share prices are delayed by at least 20 minutes. Prices are indicative only.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.