Costco is scheduled to report earnings tomorrow, it is expected to report an EPS of $3.21 on revenue of $55.55bn (after market closes).

Overview

Costco is an American multinational company which runs a network of big-box stores that are open to members only (warehouse club). In addition to being the biggest retailer of prime beef, organic groceries, rotisserie chicken, and wine as of 2016, Costco ranked as the fifth-largest retailer in the world by 2022.

Financials

Comparing the fiscal year that concluded on August 31 in 2022 to that in 2021, gross profit increased to $27.6 billion from $25.2 billion as revenue increased to $226.9 billion from $195.9 billion. EBITDA also grew from $8.5 billion in 2021 to $9.7 billion in 2022. The net profit came to $5.8 billion after all expenditures and taxes were subtracted, which was an annual gain of $0.8 billion. As a result, 2022's profits per share were $13.17, an increase of 14% from the previous year. In addition, while total assets climbed by $4.9 billion in 2022, the increase in liabilities only totalled $2.3 billion. Even though Costco's cash on hand decreased by little over a billion (now $11bn), the company's equity still saw an increase of $2.6 billion year-over-year.

Technicals

The share price of Costco’s stock closed yesterday’s session at $484.14. Applying the Fibonacci retracement to the chart, we can see that the next support level sits at $482.97 (38.2% fib). A break below the 38.2% fib could see the price slide towards $469.56 (23.6% fib) then the major level at $447.89 (0% fib). On the other hand, towards the upside, resistance sits at $493.81 (50% fib) then at $504.64 (61.8% fib). A break and close above the 61.8% fib may see the price head back towards the key resistance at $518.05 (76.4% fib). Both of the indicators are suggesting a negative stance with RSI reading 39, however, Costco is set to report its quarterly earnings tomorrow.

Summary

We can see from the financials that the company is still operating at a high level with gradual increases year-on-year. Their cash on hand remains at high value with growth amongst revenue and net profit. Based on the technicals, its stock price has been in a bearish trend since the start of February, finishing the month in the red. Now approaching the support level of $482.97, which will be the next test for more clarity on its direction. The company is scheduled to report earnings tomorrow, it is expected to report an EPS of $3.21 on revenue of $55.55bn (after market closes). Perhaps, a positive report may lead to some sort of consolidation around the 38.2% Fibonacci retracement.