To The Moon

• tops same-store comparable sales
• beats earnings agains, in-line with revenue means better cost control
• all ther headwinds has been priced-in.

$Costco(COST)$ released FQ4 financial earnings as of August. EPS beats and revenue in-line. A better cost control surprised the market, there's no plunge after close.

Revenue $72.09 billion, up 15% year-on-year, slightly beat consensus of US $71.89 billion;

Gross profit $8.53 billion, up 7.4% year-on-year, and the gross profit margin continued to drop to 11.84%.

Diluted EPS $4.2, up 11.7% year-on-year, higher than the consensus of US $4.14.

Profits growth can't keep up with revenue, especially the gross profit margin drops quickly.

3 main factors: Natural gas price; Staff salary control; Foreign exchange losses.

Since these three points are all known problems in the market, most institutions have already priced them.

In terms of same-store sales, after declining for four consecutive quarters, it began to resume growth to 10.4, and the average same-store sales increased by 20.8 year-on-year in two years, among which the growth rate of Canadian and international business was higher than that of North America. Therefore, the change of foreign exchange, that is, the increasingly strong US dollar, has a greater impact on it.

In terms of inventory, the inventory growth at the end of Q3 was 26%, while the figure at the end of Q4 was lower than 26%, which means that Q4 did not increase quarter on quarter. Among them, 10-11% is caused by inflation, while the growth of new inventory is 3%.

COST inventory change

Overall, the performance is in line with expectations. COST is also a stock with concentrated positions of hedge funds and pensions, which has performed better than other supermarkets this year.