Costco Wholesale Corporation (NASDAQ:COST) Beats Analysts’ Estimates

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Costco Wholesale Corporation (NASDAQ:COST) stock rose 3.52% (As on Dec 10, 9:38:42 AM UTC-4, Source: Google Finance) after the company’s earnings totaled $1.32 billion, compared with $1.17 billion in last year’s first quarter. The company has beaten the earnings & topline estimates in the latest quarter.  Costco’s growth strategies, improved price management, decent membership trends and increasing penetration of the e-commerce business have been contributing to its performance. In the reported quarter, the company’s e-commerce comparable sales rose 14.3% year over year. The membership fees increased 9.9% to $946 million in the reported quarter. Comparable sales climbed 15% from the prior-year quarter, reflecting an improvement of 14.9%, 17.2% and 13.4% in the United States, Canada, and Other International locations, respectively. We note that traffic or shopping frequency rose 6.8% globally and 5.9% in the United States. Average transaction or ticket was up 7.7% globally and 8.5% in the United States. During the quarter under discussion, Costco opened nine units, including one relocation. For the remainder of the year, the company plans to open 23 new units, including four relocations.

COST in the first quarter of FY 22 has reported the adjusted earnings per share of $2.97, beating the analysts’ estimates for the adjusted earnings per share of $2.59, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue growth of 16.5 percent to $50.36 billion in the third quarter of FY 21, beating the analysts’ estimates for revenue of $5.02 billion. Operating income in the quarter increased 18.4% year over year to $1,693 million, while operating margin expanded marginally by 10 basis points to 3.4%.

Costco ended the reported quarter with cash and cash equivalents of $12,751 million and long-term debt (excluding the current portion) of $6,667 million. The company’s shareholders’ equity was $18,463 million, excluding non-controlling interests of $537 million. Management incurred capital expenditures of $1.05 billion during the first quarter. The company projected capital expenditures of approximately $4 billion for fiscal 2022.

Additionally, Ancillary and other business gross margin was higher by 2 basis points on a reported basis and, again, plus 12 basis points ex gas inflation. Gas and travel were better year-over-year as they anniversary a softer quarter a year ago, offset by e-comm, which was particularly strong a year ago and also related to the pandemic.

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