After Costco Wholesale Corporation's ( NASDAQ:COST ) earnings announcement in February 2019, analysts seem cautiously bearish, as a 5.4% rise in profits is expected in the upcoming year, against the higher past 5-year average growth rate of 10%. Presently, with latest-twelve-month earnings at US$3.1b, we should see this growing to US$3.3b by 2020. Below is a brief commentary around Costco Wholesale's earnings outlook going forward, which may give you a sense of market sentiment for the company. For those interested in more of an analysis of the company, you can research its fundamentals here .
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How is Costco Wholesale going to perform in the near future?
The 24 analysts covering COST view its longer term outlook with a positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To understand the overall trajectory of COST's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
From the current net income level of US$3.1b and the final forecast of US$3.7b by 2022, the annual rate of growth for COST’s earnings is 6.1%. EPS reaches $9.69 in the final year of forecast compared to the current $7.15 EPS today. As revenues is expected to outpace earnings, analysts expect margins to contract from the current 2.2% to 2.2% by the end of 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Costco Wholesale, I've compiled three key aspects you should further research:
- Financial Health : Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation : What is Costco Wholesale worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Costco Wholesale is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Costco Wholesale? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org . This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.