Costco Q4 earnings preview: Are membership fee hikes in the cards?
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Costco (NASDAQ:COST) is scheduled to announce Q4 earnings results on Thursday, September 22nd, after market close.
Investors will looking at whether Costco (COST) raises its membership fee after Walmartâs (WMT) Samâs Club, one of its key competitors, increased fees for the first time in nearly a decade. A point to note is Samâs Club's pricing levels are still below Costco's comparable membership costs.
Deutsche Bank analyst Krisztina Katai suggests a membership price increase may happen later this year or early 2023, while Gordon Haskett's analyst Chuck Grom said Costco's (COST) team has "gone out of its way [...] to suggest that now is not the right time to raise the membership fee."
Meanwhile, Costco (COST) and other big box retailers have seen dips in foot traffic since 2021's record levels according to Placer.ai analysis. July 2022 foot traffic to Costco (COST) dropped 8.9% Y/Y, with analysis suggesting the pullback is just normalization from record-breaking shopping in 2021.
A disappointing forecast from Walmart and word of job cuts at Shopify sparked overall selling in the retail sector in July, hurting Costco (COST) as well. Investors were worried that high inflation and a weakening economy will force consumers to cut back on their spending.
Nevertheless, analysts remain bullish on the stock broadly, with 23 of 33 analysts surveyed by Seeking Alpha rating the stock at Buy or Strong Buy. Deutsche Bank has called Costco (COST) "one of the most consistent operators in our group, and its steady traffic gains and high membership renewal rates serve as key differentiators in an increasingly uncertain backdrop."
Over the last 3 months, EPS estimates have seen 13 upward revisions and 3 downward. Revenue estimates have seen 15 upward revisions and 3 downward. The consensus EPS Estimate is $4.17 (+6.9% Y/Y) and the consensus Revenue Estimate is $71.99B (+14.9% Y/Y).
Bloomberg expects company comparable sales including gas will rise +12.5% and comparable sales excluding fuel will be up +9.82% in constant currency.
The stock has been an outperformer in the past year, with about a 11% return over a 12-month period compared to a 11% decline in the S&P 500.

Over the last 2 years, Costco (COST) has beaten EPS estimates 100% of the time and has beaten revenue estimates 75% of the time.