Costco Wholesale Shares Cost Less After Earnings Come Out

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Costco Wholesale Corporation (NASDAQ: COST)

 

On Thursday, October 4th, 2018 Costco Wholesale Corporation reported their fourth quarter fiscal earnings after the market closed for regular trading. The company’s stock closed down -$1.52  at $231.68 in the regular trading session.

However, once the earnings announcement hit the street, shares dropped precipitously and closed down an additional -$5.48 at $226.20. This was a 2.37% drop after the market closed.

With an already skittish Market from Thursday’s trading action, which saw the DOW close down over 200 points, it will be interesting to see how the shares will be trading on Friday morning when the Market opens at 9:30 Eastern Standard Time.

The Numbers

The company reported  earning $2.36 per share on a diluted basis which compares to $2.08 in the same period last year. Sales came in at 43.4 billion dollars which was also an increase over last year’s 41.4 billion dollars for the same period.

So they had strong numbers come out and yet the stock sold off. It is being attributed buy some sources to be some type of internal auditing and financial reporting issues that may not have been done according to SEC rules or protocol. We will have to wait for more clarity on this issue from the company in days or weeks to come.

Company Comments

Chief Financial Officer Richard Galanti i had this to say  to investors

“We should have done a better job. All the lookbacks we have done, and our outside help has done, has found no issues whatsoever in terms of misstatements or breaches. But ‘we can’t be more positive” until the release of its annual report, which should be filed on schedule.

He also  had this to say ,

“We’re not only investing in price, we’re investing in infrastructure and would be “doubling down” its spending on IT and fulfillment centers.

The Charts

The above price chart shows Costco going back roughly one year. It is easy to see the clear up trend with the share price well above the 50 and 200 day moving averages.

The above price chart shows Costco in the regular trading session on the left, and the after hours session on the right. Clearly once the earnings announcement came out, share sold hard. They found a bottom and then tried to rally 50% of the way that it had fallen.

Company Profile

Costco Wholesale Corporation, together with its subsidiaries, operates membership warehouses. It offers branded and private-label products in a range of merchandise categories.

The company provides dry and packaged foods, and groceries; snack foods, candies, alcoholic and nonalcoholic beverages, and cleaning supplies; appliances, electronics, health and beauty aids, hardware, and garden and patio products; meat, bakery, deli, and produces; and apparel and small appliances.

It also operates gas stations, pharmacies, optical dispensing centers, food courts, and hearing-aid centers; and engages in the travel business. In addition, the company provides gold star individual and business membership services.

As of September 3, 2017, it operated 741 membership warehouses, including 514 warehouses in the United States, Washington, District of Columbia, and Puerto Rico, 97 in Canada, 37 in Mexico, 28 in the United Kingdom, 26 in Japan, 13 in Korea, 13 in Taiwan, 9 in Australia, 2 in Spain, 1 in Iceland, and 1 in France.

Further, the company sells its products through online. The company was formerly known as Costco Companies, Inc. Costco Wholesale Corporation was founded in 1976 and is based in Issaquah, Washington.-YahooFinance

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The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author has no business relationship with any company whose stock is mentioned in this article nor is receiving compensation from any of the companies mentioned.

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