What Does Costco's Chart Say Heading Into Earnings?Bulk-retailing giant Costco NASDAQ:COST is set to release fiscal Q4 earnings this week at a time when the stock has fallen more than 10% after hitting an all-time high in February. What does technical and fundamental analysis say could happen next?
Let's check things out:
Costco's Fundamental Analysis
COST touched a $1,078.23 intraday all-time high on Feb. 13, but lost about 12.5% between then and Monday's $943.26 close.
The retailer plans to release its latest earnings after the bell Thursday, with analysts expecting $5.81 in GAAP earnings per share on $86.1 billion of revenue.
If the results play out in that way, those numbers will reflect a 9.8% gain from the $5.29 GAAP EPS that COST reported in the year-ago period. Revenues will have risen about 8% from the $79.7 billion seen in fiscal Q4 2024.
Costco's year-over-year sales growth has been running in the high single digits percentage-wise for several quarters now.
Despite this single-digit growth rate, COST was trading at about 52x its 12-month forward earnings estimate at last check. By comparison, the S&P 500 was trading at 22.4x forward earnings, while key competitors Walmart NYSE:WMT and Amazon NASDAQ:AMZN were trading at 39x and 35x, respectively.
In other words, the market highly values large retailers that sell at scale, but it might not take much for any or all of them to undergo a valuation reset.
Meanwhile, of the 28 sell-side analysts that I found that cover COST, 11 have lowered their earnings estimates since the quarter started, while just three revised those estimates higher. (The rest left their numbers unchanged.)
Costco's Technical Analysis
Now let's look at COST's chart going back to late 2024:
Look in the center of this chart and you'll see a smallish "double-bottom" pattern of bullish reversal that occurred last spring, marked with a green jagged line.
This took place inside a much larger "double-top" pattern of bearish reversal that spanned from very early 2025 into this summer, as marked with the pink shaded area.
While these patterns didn't work to perfection, both still produced a market reaction for COST that was close to what they predicted.
So, what now?
If you look at the double bottom's second low and the double top's second high (marked "Top 2"), you can see a large pennant formation (marked with the purple "Pennant" box at the chart's right).
What do pennants often foretell? Increased volatility, that's what.
They're not directional indicators -- but as they close, that closure often produces an explosive reaction by a stock either upward or downward.
Meanwhile, Costco's Relative Strength Index (the gray line at the chart's top) is as neutral as neutral gets.
The daily Moving Average Convergence Divergence indicator (or "MACD," marked with black and gold lines and blue bars at the chart's bottom) is also pretty flat, with all three components running together.
In addition, the stock is running in line with both its 21-day Exponential Moving Average (or "EMA," marked with a green line above) and 50-day Simple Moving Average (or "SMA," denoted by a blue line).
That has likely more or less coiled up both the swing crowd and professional managers for a move following this week's earnings release. After all, COST has moved an average over the past three quarters of $34 on the day following its earnings report.
That said, the stock is trading south of its 200-day SMA (the red line), putting an upside pivot ($976 in the chart above). There is no similar nearby downside pivot.
An Options Option
Options traders who are bullish on COST but trying to cap risk going into earnings might set up a simple bull-call spread in this scenario.
Here's an example using Monday morning's pricing:
-- Buy one COST Sept. 26 $950 call for about $17.20.
-- Sell (write) one COST Sept. 26 $980 call for roughly $6.65.
Net Debit: $10.55.
The trader in this example is spending $10.55 to try to gain up to $30. The maximum loss would be the net premium spent. The maximum gain would be a 184% profit.
Those who are bearish might consider a bear-put spread. Example:
-- Buy one COST Sept. 26 $940 put for about $15.
-- Sell (write) one COST Sept. 26 $910 put for roughly $5.50.
Net Debit: $9.50.
This trader would be risking $9.50 to try to gain up to $30. The maximum loss would be the net premium spent. The maximum gain would be a 216% profit.
(Moomoo Technologies Inc. Markets Commentator Stephen “Sarge” Guilfoyle had no position in COST at the time of writing this column.)
This article discusses technical analysis, other approaches, including fundamental analysis, may offer very different views. The examples provided are for illustrative purposes only and are not intended to be reflective of the results you can expect to achieve. Specific security charts used are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security. Past investment performance does not indicate or guarantee future success. Returns will vary, and all investments carry risks, including loss of principal. This content is also not a research report and is not intended to serve as the basis for any investment decision. The information contained in this article does not purport to be a complete description of the securities, markets, or developments referred to in this material. Moomoo and its affiliates make no representation or warranty as to the article's adequacy, completeness, accuracy or timeliness for any particular purpose of the above content. Furthermore, there is no guarantee that any statements, estimates, price targets, opinions or forecasts provided herein will prove to be correct.
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