Costco delivers strong first quarter margins, beats on top and bottom lines

Investing.com -- Costco Wholesale Corp (NASDAQ:COST ) reported higher first-quarter revenue and better-than-expected profit on Thursday, as budget-conscious consumers turned to its warehouses for low-priced groceries and discretionary items.

The company’s shares were up marginally higher in premarket trading Friday.

Total (EPA:TTEF ) revenue rose nearly 7% to $62.15 billion for the quarter ended November 24. Analysts were estimating it to be at $62.33 billion.

Costco reported earnings per share (EPS) of $4.04, surpassing market expectations of $3.78, and up from $3.58 a year back. 

Gross margin for the quarter expanded by 24 basis points (bps) to 11.3%, also above expectations.

Paid membership grew 7.5% and membership fee income (MFI) rose by 8%.

While the print was overall positive, the muted reaction is likely due to the "high bar" set by the stock's valuation, according to Baird analysts. 

"Net, COST's traction with consumers remains best in class," they added, reiterating an Outperform rating.

D.A. Davidson analysts shared similar post-earnings remarks. 

"COST’s offering is clearly resonating with consumers, but we maintain our Neutral rating with the stock trading at 54x consensus estimates for FY2025."

Pratyush Thakur contributed to this report. 

 

Source: Investing.com