Costco (COST): RBC Cuts Ests Ahead of Earnings

RBC Capital analyst, Scot Ciccarelli, cut his estimates on Costco Wholesale (NASDAQ: COST). Over the last several years, Costco has managed to deliver traffic growth of 3– 5%. While monthly trends for most of 3Q have been slightly below that trend, particularly in April, which saw traffic growth of just ~2% (~3% ex-California), 2-year stacked quarterly traffic trends remain among the best across our coverage, averaging ~8%+ over the last several years. Although the company will likely continue to face some pressures related to FX and fuel exposure in the near/medium term, they view these as temporary in nature and expect them to ease into the back half of FY2016 as the company laps the worst of the declines in foreign currencies relative to the US$ and significant fallout in oil/fuel prices observed last year. The 3Q EPS estimate declines to $1.22 from $1.25 and FY16E to $5.32 from $5.35.

No change to Outperform rating or $169 PT.

COST reports after the close on 05/25.

For an analyst ratings summary and ratings history on Costco Wholesale click here. For more ratings news on Costco Wholesale click here.

Shares of Costco Wholesale closed at $142.01 yesterday.

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