What Does Costco Corp (NASDAQ:COST) Earnings Symbolize?


The recent financial results of second quarter of fiscal year 2015, set forth by Costco Corp (NASDAQ:COST), before the opening of trading session of Thursday, definitely implied good for the company along with its interested investors. While previously, the EPS of the company had stood at $1.05, with a generated income of $25.67 billion; this year the figures saw a rise, with Costco Corp’s (NASDAQ:COST) EPS of $ 1.35 and a gross revenue of $ 26.87 billion. On the contrary the consensus analysts’ estimate delineated figures of an EPS of $1.18 with a revenue of $27.65 billion.

The sales of same-stores saw an increase of 4% in the sales it made in United States, however in the rest of the world the results weren’t that pleasant, since the sales went down by 2%. But with the inclusion of the sale of Gasoline, the company saw an increase of overall 2%. If the sales of gasoline are taken out of the equation, then the same-store sales in U.S escalated by a figure of 8%. Moreover, both international and combined sales also saw an increase of 8%.

But not only did the percentage of sales rise; rather the merchandise cost as well as the SG&A expenses saw an elevation. The former increased by 3.8%, while the latter witnessed an increase of 5.5%.

There wasn’t any dramatic change in the income generated by Costco Corp (NASDAQ:COST) from its membership fee. A probable reason for this is that its gross income and its membership revenue generally go side by side. Therefore, it becomes mandatory for the company, either to go for an increase in the fees or else propel inclusion of new members.

Furthermore, an important issue to be addressed is to keep a check on the costs. In fact, this was the very reason in play which compelled the company to call an end to its transaction with American Express.  There is a strong likelihood that in order to cut down its costs, Costco Corp (NASDAQ:COST) must have wanted a decrease in the swipe fees it had to pay. However, American Express, probably refused to agree to this and thus the deal between the two companies came to an end.

There are new horizons for Costco Corp (NASDAQ:COST) , which ultimately might result in the increase of its members. An example of this is the expected deal between Costco Corp (NASDAQ:COST) and Citigroup Inc. (NYSE:CTY), or between Costco and Visa.

Statistics suggest that the total income of the company for this quarter amounted to about $598 million. This figure includes the tax benefit of $57 million as well as a tax charge of $14 million. The company’s total earnings per share have exceeded the consensus estimate, with a figure of $1.24 per share. This remains true even if Costco Corp’s (NASDAQ:COST) net $0.11 is taken out of the equation.

So far the company hasn’t made public any revenue estimates for the coming third quarter. However, consensus analysts’ estimate is still there for guidance. The latter estimate suggests an EPS of $1.17 with a gross generated income of $26.84 billion for the third quarter of fiscal year 2015.

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