Costco earnings preview: Memberships and margins in focus
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Costco (NASDAQ:COST) will provide its fiscal first quarter of 2023 update on Thursday after the market closes. 

The Washington-based retail giant has exceeded revenue expectations in 8 consecutive quarters, missing EPS estimates only once in that span. It will need to clear a bar of $3.17 in earnings per share and $54.94B in revenue to keep up its characteristic earnings beat trends. 

The big box retailerâs stock encountered some choppiness as of late after missing sales estimates for the month of November. As such, shares have fallen about 7% in the week prior to the earnings report. 
That said, the monthly sales reports bake in much of the top-line expectation, leaving a laser focus on margins and membership trends. Amid inflationary pressures and the companyâs steadfast commitment to low prices, gross margins are expected to contract by over 200 basis points from the prior year.

Still, analysts remain bullish on the stock given its ability to drive interest in memberships as consumers tighten belts. In fact, analysts expect the company to gain market share based upon its value proposition, with optionality to raise membership prices, following Samâs Clubâs suit. Costco will report financial results for its fiscal first quarter postmarket on Thursday. 

âWe expect high food inflation to drive continued share gains for the warehouse club channel (including Costco) given the strong value proposition and price positioning on overlapping SKUs vs. mass and traditional grocery,â Bank of America analysts said in a note to clients ahead of the results.
The bank added that Black Friday sales appeared positive for the company and added the name to its âbest ideaâ list.