Costco’s Earnings Are Coming Up. Analysts Like the Stock, But Expect Volatility Ahead.

• Costco is scheduled to release its fourth-quarter results Thursday. The numbers are due after some numbers suggested that its growth was decelerating earlier this year.

• Investors may want to “take advantage” of any volatility this may create for Costco shares and buy its stock, Oppenheimer said.

• The company can deliver “sustainable” results, even in an increasingly competitive market, the analysts said.

Costco shares may be in for a bout of volatility some analysts think could give investors a chance to snag a stock poised to deliver “sustainable” results.

Costco Wholesale (COST) is slated to report fourth-quarter earnings after the closing bell Thursday. The update comes after some investors were shaken in the spring by signs that sales growth had decelerated. Sales rose less—on a year-over-year basis—in the third quarter than they did in the second, and some monthly sales reports suggested that momentum was slowing.

Costco stock has been on a hot multiyear run, but this year has been a bumpy one—and the company’s latest quarterly results are due Thursday. Analysts are generally bullish on the company, a favorite of investors and shoppers alike, but some of them say the volatility is likely to continue.

Those concerns may have weighed on a stock that generally rose between March lows and June before retreating again. More fluctuations may be ahead, Oppenheimer said, but that need not be a source of anxiety,

“We would continue to take advantage of a likely volatile trade amidst very difficult upcoming [year-over-year] compares in the non-foods category and likely nearer-term [earnings per share] headwinds,” analysts wrote in a recent research note.

Annual comparisons may be influenced by Costco’s recent expansion of warehouse hours for executive members, Oppenheimer said. People stocking up on goods ahead of a port strike last fall may also be a factor, Citi said.

Company sales came in at $84.4 billion for the fourth quarter, up 8% from last year, according to the company. Comparable store sales rose 5.7% year-over-year. Analysts anticipate the company will report $2.6 million in profit, up from $2.4 million a year earlier, according to consensus estimates from Visible Alpha.

Costco shares, up 2.6% so far this year, have gained some 170% over the past five years. Wall Street analysts think the stock, which ended Tuesday around $944, can rise to $1,080, according to the consensus estimate as tracked by Visible Alpha.

Read the original article on Investopedia