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.

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