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Two Ways: Costco Discounts Earnings Forecast


Strengthen your portfolio in good times and bad.


Costco Cuts

Costco (COST) shares are getting hurt this morning. Reuters reports the discount retailer is warning second-quarter earnings could fall substantially below Wall Street expectations, the result of lower gas prices (many Costco locations feature gas stations) and unfavorable foreign exchange rates. The company is estimating profits will come in under $0.70 a share. Analysts, meanwhile, were expecting $0.71.

Costco will report official results on March 4. Shares were down nearly 7% this morning in pre-market trading. For other retail ideas, see Professor Jeff Macke's Macy's to Reread Chapter 11?

From the Bull Pen: In retail, bulls can consider Family Dollar Stores (FDO). See the stock breaking above 4-month highs. One option is to set an initial position here with a sell stop below $28.50.

From the Bear Cave: Bulls were hoping for a double bottom in Costco at $45. Now that support should act as resistance. Bears can enter a downside position if and when it reapproaches this level.

Quick Check Around the World

Asian trading closed with the Hang Seng 2.25%, Nikkei 2.73%, Sensex 0.57%, Taiwan 0.39% and Shanghai 2.28%.

Glancing towards Europe, we see the CAC 1.11%, DAX 0.70%, FTSE 0.29%

As of 8:55 a.m. EST, S&P futures are trading +3 to 834.00, and Nasdaq futures are +3 to 1210.00.

A Look At Commodities

Crude oil is trading +0.54 to 41.32. Gold is +6.80 to 899.30. Silver is +0.65 to 12.360, and copper +0.70 to 152.90.

The dollar index is +0.7100 to 86.1400.

On the Radar


07:00 MBA Mortgage Applications
07:30 Challenger Job Cut YoY
08:15 ADP Employment Change
10:00 ISM Non-Manufacturing Composite

Click here for the full trading radar.

Get over the hump! Good luck, Minyans!

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No positions in stocks mentioned.

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