Costco Wholesale (NASDAQ:COST) Issues Earnings Results, Misses Estimates By $0.05 EPS

Costco Wholesale (NASDAQ:COST) posted its quarterly earnings results on Thursday. The retailer reported $4.93 earnings per share for the quarter, missing analysts’ consensus estimates of $4.98 by ($0.05), FiscalAI reports. Costco Wholesale had a net margin of 2.99% and a return on equity of 28.57%. The company had revenue of $70.53 billion during the quarter, compared to analyst estimates of $69.68 billion. During the same quarter in the previous year, the business posted $4.28 earnings per share.

Here are the key takeaways from Costco Wholesale’s conference call:

• Costco reported a strong third quarter, with net income up 15% to $2.19 billion and net sales up 11.6% to $69.15 billion, while comparable sales rose 9.8%.
• Membership remains healthy, with membership fee income up 10.7% and paid executive memberships up 9.6%; management said executive member growth and renewal efforts are helping offset slower overall member growth.
• Costco highlighted strong demand in gas, saying record volumes were driven by higher prices and consumer price sensitivity, and that first-time gas users could become more loyal, higher-spending members over time.
• Margins were mixed: reported gross margin declined 21 basis points, but excluding gas inflation it was roughly flat to slightly better, while SG&A improved on the surface but was pressured by healthcare and some one-time items.
• Digital and technology initiatives are gaining traction, including 21.5% digitally enabled comparable sales growth, faster checkout tools, same-day delivery expansion in Europe, and early benefits from AI-driven search and retail media partnerships.

Costco Wholesale Stock Down 0.8%

Costco Wholesale stock opened at $995.20 on Friday. The company has a quick ratio of 0.59, a current ratio of 1.06 and a debt-to-equity ratio of 0.18. The company has a market capitalization of $441.52 billion, a P/E ratio of 51.75, a P/E/G ratio of 4.94 and a beta of 0.92. The firm has a 50 day moving average price of $1,008.28 and a 200-day moving average price of $962.53. Costco Wholesale has a twelve month low of $844.06 and a twelve month high of $1,096.50.

Costco Wholesale Increases Dividend

The business also recently declared a quarterly dividend, which was paid on Friday, May 15th. Investors of record on Friday, May 1st were given a dividend of $1.47 per share. The ex-dividend date was Friday, May 1st. This is an increase from Costco Wholesale’s previous quarterly dividend of $1.30. This represents a $5.88 annualized dividend and a yield of 0.6%. Costco Wholesale’s dividend payout ratio (DPR) is currently 30.58%.

Analyst Ratings Changes

Several equities research analysts recently commented on the stock. Rothschild & Co Redburn lifted their target price on shares of Costco Wholesale from $890.00 to $1,000.00 and gave the stock a “neutral” rating in a research report on Tuesday, February 17th. UBS Group boosted their price target on shares of Costco Wholesale from $1,205.00 to $1,275.00 and gave the stock a “buy” rating in a research report on Wednesday, May 20th. Sanford C. Bernstein reiterated an “outperform” rating and issued a $1,192.00 price objective on shares of Costco Wholesale in a research note on Tuesday, May 12th. Deutsche Bank Aktiengesellschaft boosted their target price on Costco Wholesale from $1,104.00 to $1,106.00 and gave the company a “buy” rating in a research report on Thursday, May 7th. Finally, Truist Financial upped their price objective on shares of Costco Wholesale from $926.00 to $977.00 and gave the stock a “hold” rating in a report on Friday, March 6th. Twenty-one investment analysts have rated the stock with a Buy rating, eleven have given a Hold rating and one has assigned a Sell rating to the company’s stock. According to MarketBeat.com, the company presently has an average rating of “Moderate Buy” and an average target price of $1,051.18.

Key Headlines Impacting Costco Wholesale

Here are the key news stories impacting Costco Wholesale this week:

• Positive Sentiment: Costco reported fiscal Q3 results that topped sales expectations, with revenue of $70.53 billion, same-store sales up 9.8%, and strong demand for essentials and gasoline helping drive traffic. Reuters article
• Positive Sentiment: Analysts remained upbeat after the report, with Morgan Stanley reaffirming an Overweight rating and raising its price target to $1,130, while William Blair kept a Buy rating on Costco’s resilient fundamentals and member-driven growth. Morgan Stanley rating article William Blair rating article
• Positive Sentiment: The company highlighted record-breaking fuel volume and strong digital growth, reinforcing the view that Costco is still taking share from value-conscious consumers. Zacks earnings call article
• Neutral Sentiment: The earnings report was mixed on the bottom line, with EPS of $4.93 slightly missing estimates of $4.98, even as profit rose year over year and revenue beat expectations. MarketBeat earnings report
• Negative Sentiment: Investors are also weighing margin pressure, as higher transportation costs and compressed gross margins may limit near-term upside despite the strong sales trend. Motley Fool article

Insider Activity at Costco Wholesale

In other news, EVP Claudine Adamo sold 730 shares of the stock in a transaction on Monday, March 9th. The stock was sold at an average price of $1,003.02, for a total transaction of $732,204.60. Following the completion of the transaction, the executive vice president owned 6,121 shares in the company, valued at approximately $6,139,485.42. This represents a 10.66% decrease in their position. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which can be accessed through this hyperlink. 0.10% of the stock is owned by corporate insiders.

Institutional Inflows and Outflows

A number of hedge funds have recently bought and sold shares of the business. Mcguire Capital Advisors Inc. purchased a new position in Costco Wholesale during the 4th quarter valued at about $28,000. Imprint Wealth LLC purchased a new stake in shares of Costco Wholesale in the third quarter worth about $36,000. Itau Unibanco Holding S.A. boosted its position in shares of Costco Wholesale by 527.3% in the fourth quarter. Itau Unibanco Holding S.A. now owns 69 shares of the retailer’s stock valued at $60,000 after acquiring an additional 58 shares during the period. Swiss RE Ltd. purchased a new position in Costco Wholesale during the fourth quarter valued at approximately $69,000. Finally, Gilpin Wealth Management LLC bought a new stake in Costco Wholesale during the 4th quarter worth approximately $71,000. 68.48% of the stock is currently owned by hedge funds and other institutional investors.

About Costco Wholesale

Costco Wholesale Corporation operates a global chain of membership-only warehouse clubs that sell a wide array of merchandise in bulk at discounted prices. The company’s product mix includes groceries, fresh and frozen food, household goods, electronics, apparel, and seasonal items, augmented by its prominent private-label brand, Kirkland Signature. Costco’s business model centers on annual membership fees and high-volume, low-margin sales, designed to drive repeat purchasing and strong customer loyalty among both consumers and small-business buyers.

Beyond merchandise, Costco provides a range of ancillary services that complement its warehouses, including gasoline stations, pharmacy and optical services, hearing aid centers, photo services, and travel and insurance products.