Costco (COST) Reports Q3 Earnings: What Key Metrics Have to Say

Costco (COST) reported Q3 revenue of $63.21 billion, an 8% increase year-over-year, slightly exceeding the consensus estimate of $63.14 billion, and EPS of $4.28, up from $3.78 in the prior year and above the $4.25 estimate. Key metrics such as comparable sales for the total company and U.S. operations, excluding the impact of foreign-currency and gasoline prices, surpassed analyst estimates, while membership fees rose 10.4% year-over-year to $1.24 billion, matching expectations; the stock holds a Zacks Rank #2 (Buy), suggesting potential near-term outperformance.

Analysis

Costco reported strong Q3 fiscal 2025 results, with revenue reaching $63.21 billion, an 8% year-over-year increase, which marginally surpassed the Zacks Consensus Estimate of $63.14 billion by 0.10%. Earnings per share (EPS) grew to $4.28 from $3.78 in the prior-year quarter, delivering a +0.71% surprise against the consensus estimate of $4.25. The company's financial health is further evidenced by robust key metrics: total company comparable sales rose 5.7%, exceeding the 5.4% estimate, and an even stronger 8% when excluding foreign exchange and gasoline price impacts, well above the 6.8% estimate. U.S. comparable sales were particularly strong at 6.6% (versus 5.5% est.) and 7.9% ex-forex/gas (versus 6% est.). Membership fee revenue, a critical indicator, grew 10.4% year-over-year to $1.24 billion, aligning with analyst expectations and underscoring customer loyalty. While net sales of $61.97 billion slightly missed the $62.05 billion estimate, the overall revenue beat and strong comparable sales, especially in the U.S. and on an adjusted basis internationally (Other International ex-forex/gas +8.5% vs 6.6% est.; Canada ex-forex/gas +7.8% vs 6.7% est.), highlight resilient consumer demand. However, reported comparable sales for Canada (2.9% vs 6% est.) and Other International (3.2% vs 5.6% est.) missed estimates, and the total worldwide warehouse count of 905 was slightly below the 906 estimate, although U.S. and Puerto Rico warehouse numbers (624) slightly exceeded the 622 estimate. Despite these solid operational results, Costco's stock has returned +1.9% over the past month, underperforming the S&P 500 composite's +6.7% gain, though it currently holds a Zacks Rank #2 (Buy), suggesting potential for near-term outperformance.

Key Decisions for Investors

• Given the robust earnings and revenue performance, strong U.S. comparable sales, and consistent membership fee growth, investors may find the current Zacks Rank #2 (Buy) supportive of a positive outlook for Costco.
• It is advisable to monitor the divergence between reported and currency-adjusted comparable sales in international segments, particularly Canada and Other International where reported figures missed estimates, and to assess the reasons behind the stock's recent underperformance relative to the S&P 500.
• Investors should observe future trends in net sales growth and total worldwide warehouse expansion, as these metrics slightly missed analyst expectations in the reported quarter, to ensure the company maintains its growth momentum.