Costco to release fiscal Q1 results

What's Happening

Costco ( COST ) is scheduled to report first-quarter results on December 14. The company will report after the market close, with the consensus calling for earnings of $1.35 per share. During the same period last year the company earned $1.24 per share, and the stock is up 17.9% on the year.

Technical Analysis

COST was recently trading at $188.28, down $2.94 from its 12-month high and $38.28 above its 12-month low. Technical indicators for COST are bullish and the stock is in a strong upward trend. The stock has recent support above $180.25 and recent resistance below $191.25. Of the 20 analysts who cover the stock, 13 rate it a "strong buy", one rates it a "buy", and six rate it a "hold". COST gets a score of 74 from InvestorsObserver's Stock Score Report.

Analyst's Thoughts

Member club Costco has trended higher through the year, with the exception of a selloff in May resulting from a disappointing third-quarter sales report. Shares rallied after the company's October report, and are currently trading just shy of their all-time high. The consensus calls for earnings of $1.35 for the quarter, but the street has a whisper number that is a penny lower than the consensus of $1.34. The lower whisper number is not the best predictor of a strong quarterly report, but the lower expectation has been priced into the stock, meaning that shares will make a smaller than expected move to the downside if the quarterly profit is a little weaker than expected.

Stock Only Trade

If you're looking to establish a long stock position in COST, consider buying the stock under $188.00. Sell if it falls below $169.00 or take profits if it gets to $216.00.

Bullish Trade

If you want a bullish hedged trade on the stock, consider a January 165/170 bull-put credit spread for a 30-cent credit. That's a potential 6.4% return (55.5% annualized*) and the stock would have to fall 9.6% to cause a problem.

Bearish Trade

If you want to take a bearish stance on the stock at this time, consider a January 200/203 bear-call credit spread for a $0.40 credit. That's a potential 15.4% return (133.7% annualized*) and the stock would have to rise 6.4% to cause a problem.

Covered Call Trade

If you like the stock, but wish to lower your cost basis on a new position, you may want to consider an April $190.00 covered call. Buy COST shares (typically 100 shares, scale as appropriate), while selling the April $190.00 call for a debit of $180.00 per share. The trade has a target assigned return of 5.5%, and a target annualized return of 15.3% (for comparison purposes only).

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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