Costco Earnings Report Thursday. Here’s What to Expect.
The back story. Costco (ticker: COST) is one of the few companies in the retail industry that still reports monthly same-store sales updates.
That—along with the company’s stable performance—means that there aren’t usually big surprises in its earnings reports.
The stock has largely avoided the sector’s tumult, climbing slowly (at times) and surely in the past decade, helped by its subscription model and high membership-retention rates.
Costco Wholesale Expected to Earn $1.69 a Share
Costco Wholesale Corporation (COST) is expected to report earnings of $1.69 a share on sales of $35.7 billion after the market closes March 7, based on a FactSet survey of 25 analysts.
In the same period a year ago the wholesale club operator posted earnings of $1.42 a share on sales of $33 billion.
Buying strength keeps the odds of follow through in the same direction in your favor, but it’s not always a good trade.
By good trade I mean a trade you can expect to be profitable. An obvious trend is not always an opportunity for a new trade. Typically we discuss Saturation Points as a method for taking profits, today we discuss using them as an entry for a new trade in an obvious trend.
The first thing to understand about Saturation Points: We are expecting the end of a recent momentum move, with one final move in the same direction of the momentum, happening as the first push in price action.
So imagine your favorite stock trades “well-bid” for four consecutive days. (higher highs and higher lows.) On day number five, the stock opens and the first push is higher off the open price.
For example, the stocks opens at $50, and then trades higher to $54. That is the “first push.”
Here’s what we are looking for: The stock to “saturate” just before the average true range, and then reverse. So let’s say the average true range is $10, we would look for 80% of that number, so in this case $8.
Let’s go back to our example:
- Well bid for four days
- Day five the stock opens at $50 and pushes higher.
- We are looking for $58 to place our order (we don’t want to attempt to pick the exact ATR, we need to get in before we expect the reversal)
Typically I will place a “feeler” amount of trade shares to initiate the trade (keeping my risk low) , then add my full position when I get a reversal on the candlesticks. (gives me the most shares at the best price)
So we have this trade setup in BA-Boeing today. A solid bullish order flow, and a momentum reversal against the order flow, with well-offered candlesticks. Closing on the low in this case is an especially good setup.
So the first thing we need to do is fund the average true range so we know our entry target. You can get that here every morning, just type in your favorite stocks. For BA it is $8.17. So let’s use $8 to keep the numbers easy.
Yesterday’s close is $424.46, minus $8 (continued momentum and the first push lower off the open price) = $416.46. This is the number I place my initial bid for shares. If I get filled great. If I don’t I let it go.
My price or I don’t get in the trade.
The strategy I just outlined is a small piece of the how I trade, learn more about it in this video. This is tape reading, and what separate’s the pros from those struggling.