COST
Earnings week, meet a bruised chart
Costco has been on the back foot lately, with the stock down about 17% from its May high and drifting toward bear-market territory. That’s the kind of move that makes even a warehouse king look a little less invincible.
Why this report matters
The big event here is Thursday’s earnings release, which should tell investors whether Costco can keep growth humming while inflation is still hanging around like an uninvited guest. Analysts are looking for revenue around $94.8 billion and EPS of $6.53, versus $5.87 a year ago. If Costco misses, the market may treat it like a busted shopping cart wheel: small problem, big annoyance.
What could save the stock?
There are a couple of things bulls are eyeing:
- a potential special dividend
- a larger buyback
- signs that comparable sales are still holding up even as the stock chart looks ugly
Costco’s balance sheet is still pretty sturdy, with plenty of cash and relatively modest long-term debt. So the company has some ammo if it wants to reward shareholders while the market is squinting at the slowdown.
Big picture
This is less about whether Costco is a great business — it clearly is — and more about whether earnings can stop the stock from sliding into a deeper rut. In other words: the warehouse is fine, but the market wants proof the register is still ringing.