Check Out Costco's (COST) Probability To Beat This Earnings

Costco Wholesale Corporation (NASDAQ:COST) is slated to report third-quarter fiscal 2017 results on May 25, 2017. In the preceding two quarters, the company underperformed the Zacks Consensus Estimate by 13.3% and 1.7%. Let’s see how things are shaping up prior to this announcement.

Investors are keeping their fingers crossed and hoping Costco to post positive earnings surprise in the quarter to be reported. The current Zacks Consensus Estimate for the quarter under review is $1.31, reflecting a year-over-year increase of over 5%. We observe that the Zacks Consensus Estimate has improved by a penny in the past 30 days. Analysts polled by Zacks expect revenues of $28,654 million, up 7% from the year-ago quarter.

Model Predicts Lower Probability

Our proven model does not conclusively show that Costco is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Costco has an Earnings ESP of -0.76% as the Most Accurate estimate is at $1.30, while the Zacks Consensus Estimate is pegged higher at $1.31. The company carries a Zacks Rank #3, which increases the predictive power. However, we need to have a positive ESP to be confident about an earnings surprise.

Costco Wholesale Corporation Price, Consensus and EPS Surprise

Costco Wholesale Corporation Price, Consensus and EPS Surprise | Costco Wholesale Corporation Quote

Factors at Play

Costco continues to be one of the dominant retail wholesalers based on its scale and quality of merchandise offered. A differentiated product range enables the company to ensure an upscale shopping experience for its members, resulting in market share gains. Moreover, Costco continues to maintain a healthy membership renewal rate. Further, it is gradually expanding eCommerce capabilities in the U.S., Canada, U.K., Mexico, Taiwan and Korea. We are also encouraged by its expansion strategy, as it remains committed to opening new clubs in the domestic and international markets. However, investors are worried about Costco’s top-line performance that had missed the Zacks Consensus Estimate in the last nine consecutive quarters.

3 Stocks with High Probability to Beat Estimate

Here are three stocks you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Best Buy Co., Inc. (NYSE:BBY) has an Earnings ESP of +10.00% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Burlington Stores, Inc. (NYSE:BURL) has an Earnings ESP of +2.86% and a Zacks Rank #2.

Ulta Beauty, Inc. (NASDAQ:ULTA) has an Earnings ESP of +0.56% and a Zacks Rank #2.

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