Costco (COST) Surpasses Q4 Earnings Estimates

Costco (COST) reported fourth-quarter earnings of $5.87 per share, surpassing the Zacks Consensus Estimate of $5.81 and improving from $5.15 a year ago. However, the company's revenues of $86.16 billion marginally missed consensus expectations by 0.03%. Despite a history of beating EPS estimates, COST shares have underperformed the S&P 500 year-to-date, and the stock currently holds a Zacks Rank #3 (Hold), indicating an expectation for in-line market performance.

Analysis

Costco reported mixed results for the quarter ended August 2025, characterized by a bottom-line beat and a marginal top-line miss. The company posted quarterly earnings of $5.87 per share, surpassing the Zacks Consensus Estimate by 1.03% and representing a significant increase from $5.15 per share in the prior-year period. This continues a trend of strong earnings delivery, with the company beating EPS estimates in three of the last four quarters. However, quarterly revenues of $86.16 billion, while up from $79.7 billion year-over-year, fell short of consensus expectations by a slight 0.03%. This mixed financial performance is contextualized by the stock's notable underperformance year-to-date, having gained only 3.2% compared to the S&P 500's 12.9% advance. The current Zacks Rank #3 (Hold) rating reflects this situation, suggesting expectations for in-line market performance, especially as the pre-earnings estimate revision trend was categorized as mixed. The sustainability of the stock's price will now heavily depend on management's forward-looking commentary on the upcoming earnings call.

Key Decisions for Investors

• Investors should prioritize analyzing management's commentary on the upcoming earnings call for forward guidance, as the stock's direction will likely be dictated by outlook on revenue trends and profit margins rather than the backward-looking earnings beat.
• Given the stock's significant underperformance against the S&P 500 year-to-date and the neutral 'Hold' rating, a cautious approach is warranted; the slight revenue miss could be an early signal of slowing top-line growth that needs to be monitored.
• While the 14% year-over-year EPS growth is fundamentally strong, new positions should be weighed against the persistent market underperformance and the lack of a clear catalyst pending management's outlook.