Costco Wholesale share price up, Q4 net income beats analysts’ projections

Costco Wholesale Corp. revealed that its profit generated in the fourth quarter managed to beat analysts forecasts thanks to a jump in sales at the companys established stores.

According its October 8th statement, the biggest US warehouse-club chains Q4 net income increased by 13% from $617 million, or $1.40 per share, a year earlier to $697 million, or $1.58 a share. The result also exceeded a projected $1.52 per share for the three months ended August 31st.

The companys total revenue over the period rose by 9.3% to $35.523 billion. Analysts predicted an average of $35.6 billion. Costco shared that its revenue generated from membership fees rose by 7.3% and reached $768 million. The companys same-store sales increased by a total of 7% in the quarter, excluding negative impacts of the deflation of gasoline price and foreign currency effects.

The results come only a month after in August Costco posted sales that were better than initially expected thanks to strong performance of apparel, housewares, small appliances and fresh foods. Costco seriously outperformed sluggish sales of other big chains such as Wal-Mart and Target, marking its first quarter in five of better-than-expected results.

Mr. Paul Trussell, an analyst at Deutsche Bank, commented in a note, cited by Reuters: “We believe this is just the beginning of an upturn in bottom line results.” Mr. Trussell also added: “A combination of less intensity on promotions within food, cycling of higher meat/produce costs and a smoother run-rate of IT expenditures going forward, has us more optimistic of continued margin expansion ahead.”

Costco Wholesale Corp. rose by 0.55% to $129.44 per share by 13:40 GMT on the NASDAQ, marking a one-year change of +10.46%. The company closed 2.76% higher at $128.73 per share on Wednesday, giving it a market value of $56.42 billion. According to the Financial Times, the 22 analysts offering 12 month price targets for Costco Wholesale Corporation have a median target of $127.00, with a high estimate of $140.00 and a low estimate of $80.00. The median estimate represents a -1.34% decrease from the previous close of $128.73.