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Alberto Abaterusso
Alberto Abaterusso
Articles (1256) 

Costco Posts 2nd-Quarter Results of 2018

Costco missed consensus on earnings. 2nd quarter sales are up trending

March 08, 2018 | About:

Costco Wholesale Corp. (COST) missed consensus on second quarter of fiscal 2018 results and the stock fell 1.1% in after-hours trading Wednesday.

Costco posted diluted earnings per share of $1.42 while analysts expected earnings per share of $1.47 on average. The earnings per share exclude tax benefit of 17 cents per diluted share resulting from the new tax laws. The miss produced a negative surprise of 3.4%.

For the second quarter of fiscal 2018, Costco reported revenue of approximately $33 billion, a 10.8% growth from the comparable of fiscal 2017 and beat expectations by $280 million.

The chart below shows the trend in Costco’s total revenue over the last five second quarters (Costco bases its fiscal year from September to August):

In the second quarter, the U.S. wholesale hypermarket chain company reported an 8.4% year-over-year increase in comparable sales, including the item of gas, inflation and foreign exchange. When gas, inflation and foreign exchange items are excluded, the jump is only 5.4% year over year.

In North America, comparable sales including gas, inflation and foreign exchange, were up 15.8%, while those excluding gas, inflation and foreign exchange were up 8.2%. The U.S. segment contributed with a 45% and 69.5% to the North American growth in comparable sales with and without gas inflation and foreign exchange.

During the reporting period, international sales jumped 15.7% year over year while e-commerce sales rose 28.5%, both with gas, inflation and foreign exchange items.

Membership revenue, which was approximately 2.2% of total revenue, increased by 12.6% to $716 million in the second quarter of fiscal 2018.

As of the second quarter of fiscal 2018, Costco had approximately $6.830 billion in cash on hand and securities. Costco’s total assets and liabilities were valued $38.703 billion and $26.650 billion. Total current assets were valued $18.899 billion while total current liabilities were valued $18.913. As a result, the current ratio is 0.99 versus an industry average of 1.21. The company had long-term debt of $6.505 billion, while the total equity was worth $12.053 billion. The long-term debt to equity ratio was 54%.

Costco Wholesale Corp. is currently trading at $187.36 per share on the Nasdaq stock exchange. The stock gained a bit more than 13% for the 52-weeks through March 7, but underperformed the S&P 500 index with about 2.3%:

Source: Yahoo Finance

The stock is still trading below the 50-SMA line but plainly above the 200 and 100-SMA lines. The current share price is beyond the midst of a $150.00 to $199.88 52-week range.

Costco has a forward dividend yield of 1.04% versus an industry median that is 2.14%, according to GuruFocus.

(Disclosure: No positions in Costco Wholesale.)

About the author:

Alberto Abaterusso
If somebody asks what being a Value Investor means, Alberto Abaterusso would answer: “the Value Investor is not the possessor of a security that represents the company, but he is the owner of that company. As an owner of the company the Value Investor is actively involved in the dynamics of that company and his first aim is how to have sales progressively growing.”

Alberto Abaterusso would add: “probably the Value Investor is one of the least patient persons in the world concerning sales.”

Alberto Abaterusso is a freelance writer based in The Netherlands. He primarily writes about gold, silver and precious metals mining stocks. His articles have also been widely linked by popular sites, including MarketWatch, Financial Times, 24hGold, Investopedia, Financial.org, CNBS, MSN Money, Zachs, Reuters and others. Alberto holds an MBA from Università degli Studi di Bari (Italy), Aldo Moro.

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