To The Moon

$Costco(COST)$ is set to report its fiscal Q4 2025 earnings after the market closes on Thursday, September 25, 2025. Here is a detailed analysis of what investors should watch for and potential short-term trading opportunities.

EPS and Revenue: The consensus among analysts is that Costco will report an EPS of approximately $5.81 on revenue of about $86.11 billion. This implies an 8-10% year-over-year increase for both metrics. It's crucial for the company to at least meet these expectations to avoid a negative market reaction.

Summary of Costco (COST) Fiscal Q3 2025 Earnings

Costco's fiscal Q3 2025 earnings report, released on May 29, 2025, demonstrated the company's resilience and strong business model. Costco exceeded analyst expectations for both revenue and earnings per share (EPS).

Key Financial Highlights:

Revenue and EPS: The company reported total revenue of $63.21 billion, slightly beating consensus estimates, and an EPS of $4.28, comfortably surpassing analyst forecasts. This strong performance was driven by a robust 8% increase in net sales and a 13% rise in net income year-over-year.

Comparable Sales: A standout metric was the company's comparable sales growth. Overall comparable sales increased by 5.7%, and an even more impressive 8% when adjusted for gasoline prices and foreign exchange impacts. U.S. comparable sales were up 6.6%, or 7.9% adjusted.

E-commerce: E-commerce sales showed impressive growth, surging by 14.8%, highlighting the company's successful investments in its digital strategy.

Membership: Membership fee income increased by 10.4% to $1.24 billion, with global renewal rates remaining strong at over 90%.

The Lesson Learned from the Guidance

The post-earnings stock reaction and guidance from Costco's Q3 2025 report offer a clear lesson for investors:

In a challenging economic climate, a company's ability to maintain its value proposition and customer loyalty is paramount, and these factors are reflected in key metrics beyond just top-line growth.

Here's a breakdown of the key takeaways from the guidance and earnings commentary:

Value Proposition is King: Costco's strong performance, particularly its membership growth and high renewal rates, signals that its value-oriented business model resonates strongly with consumers, especially in an environment of persistent inflation. This suggests that shoppers are increasingly prioritizing value and turning to retailers that offer competitive prices on bulk goods.

Operational Excellence Mitigates Headwinds: On the earnings call, management discussed strategies to navigate macroeconomic challenges like tariffs and foreign exchange rate volatility. Their proactive approach, including localized sourcing and strategic inventory management, demonstrated an ability to protect margins and maintain competitive pricing. The company's confidence in its operational teams to "rise to the challenges" was a key takeaway.

Investments in the Future are Paying Off: The significant growth in e-commerce and the company's commentary on digital initiatives, like the "Buy Now, Pay Later" partnership, show that Costco's strategic investments are translating into tangible results. This provides confidence that the company is not resting on its laurels and is actively adapting to evolving consumer behavior.

In essence, the lesson is that while revenue and earnings are important, a deeper look at the underlying drivers of a company's success—like comparable sales, membership strength, and management's strategic focus—is essential. Costco's Q3 report confirmed that its fundamental business model remains incredibly strong and well-positioned to thrive even amidst economic uncertainties.

Analysis of Upcoming Earnings and Key Metrics to Watch

Comparable Sales (Comps): This is a critical metric for a retailer like Costco, as it indicates the sales growth from existing stores. The company's recent monthly sales data for the quarter showed strong comparable sales gains across various regions, with a notable 5.7% increase overall. Any significant deviation from this trend, particularly in the U.S. market, will be a key signal for investors.

E-commerce Growth: E-commerce sales have been a bright spot for Costco, with double-digit growth in recent quarters. Continued strong performance in this channel will be important to demonstrate the company's ability to adapt to changing consumer habits and compete with online-first retailers.

Membership Fee Revenue: This is a highly profitable and resilient revenue stream for Costco. A membership fee hike went into effect on September 1, 2024. Investors will be looking for confirmation that this increase has not negatively impacted membership renewal rates, which have historically been very high (over 90%). Any commentary on this topic will be closely watched.

The Broader Economic Context and Consumer Behavior:

Costco's business model, which focuses on providing high-quality products at low prices through bulk purchasing, positions it well in a challenging economic environment where consumers are seeking value. The earnings report will serve as a barometer for consumer sentiment and spending habits.

The impact of potential new import tariffs is a risk factor. While Costco's scale and global supply chain might help it mitigate these challenges, any commentary on the financial impact of tariffs will be important to consider.

Valuation and Stock Performance:

Costco's stock is known for trading at a premium valuation compared to other big-box retailers. The current forward price-to-earnings (P/E) ratio is significantly higher than the industry average. This high valuation means that the stock is highly sensitive to any signs of a slowdown in growth.

Despite its premium valuation, the stock has recently pulled back from its 52-week high, which some analysts view as a potential buying opportunity. However, this also indicates that a strong earnings report is needed to justify its current price and potentially drive it higher.

Costco (COST) Price Target

Based on 29 analysts from Tiger Brokers offering 12 month price targets for Costco in the last 3 months. The average price target is $1,068.45 with a high forecast of $1,225.00 and a low forecast of $626.12. The average price target represents a 13.23% change from the last price of $943.60.

Short-Term Trading Opportunities Post-Earnings

Trading Costco post-earnings can be volatile. Here are some potential scenarios and strategies:

Earnings and Comps Beat with Strong Outlook: If Costco exceeds expectations on EPS and revenue, and importantly, reports robust comparable sales and provides an optimistic outlook, the stock could see a significant short-term rally. This would alleviate valuation concerns and confirm the strength of its business model. This could present a long opportunity, but with a high-priced stock, the risk is elevated.

Mixed Results: A scenario where Costco beats on earnings but shows a slowdown in comparable sales or cautious guidance could lead to a negative market reaction. The premium valuation makes the stock vulnerable to any hint of a growth deceleration. In this case, a short-term short position could be considered, but be prepared for swift reversals.

Guidance is Key: Similar to other major companies, Costco's outlook for the upcoming quarter and the full fiscal year will be a major driver of post-earnings price action. Even if the current quarter's results are solid, a conservative forecast could temper investor enthusiasm.

Technical Analysis - Exponential Moving Average (EMA)

We are seeing COST in a downward movement, with negative momentum, and this could be due to the concerns of tariffs, we might see a further downside movement, unless COST could provide a robust comparable sales, and more important is an optimistic outlook from COST despite the tariffs concerns might be able to turn the tide.

One of the other reason for the share price decline could be the justification of its high share price is the premium valuation, and the high renewal fees could make some impact on its earnings.

Summary

Costco (COST) is set to report its fiscal Q4 2025 earnings after the market closes on September 25, 2025. Analysts anticipate an EPS of $5.81 on revenue of $86.11 billion, reflecting a solid year-over-year increase.

Key metrics to watch include comparable sales, especially in the U.S., and the growth of e-commerce. Investors will also be keen on updates regarding the recent membership fee hike and whether it has impacted historically high renewal rates.

Given its premium valuation, Costco's stock is highly sensitive to any sign of a growth slowdown. A strong report with robust comparable sales and an optimistic outlook could justify its high price and lead to a rally. Conversely, any hint of weakness in key metrics could trigger a short-term sell-off. The report will be a key indicator of consumer health and spending habits in the current economic environment.

Appreciate if you could share your thoughts in the comment section whether you think COST would provide a robust comparable sales and an optimistic outlook despite tariffs concerns.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.