Costco Wholesale Corporation (COST) Q3 Earnings Preview: Polarized?

Costco Wholesale Corporation (NASDAQ:COST) will announce its third-quarter, fiscal-year 2014 financial results on Thursday, May 29, 2014 prior to the market open. On the same day, executives will discuss the financial results on a conference call at 8:00 a.m. PT.

Wall Street anticipates that the wholesale retailer will earn $1.09 per share for the quarter, which is $0.05 more than last year's profit of $1.04 per share. iStock expects Costco to miss Wall Street's consensus number, the iEstimate is $1.05.

Sales, like earnings, are expected to increase, rising by 6.8% year-over-year (YoY). COST's consensus revenue estimate for Q3 is $25.73 billion, which is more than last year's $24.08 billion.

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Costco operates membership warehouses. The company offers branded and private-label products in a range of merchandise categories. The company also operates gas stations, pharmacies, food courts, optical dispensing centers, one-hour photo centers, and hearing aid centers; and travel businesses.

Although Costco has failed to live up to Wall Street's outlook for three straight quarters, and a most retailers suffering from polar vortex blues in the first part of 2014, WhisperNumber.com reports COST's "whisper estimate" is $1,11 – a two cent bullish earnings surprise.

Meanwhile, as we mentioned up top, Wall Street's revenue estimate is $25.73 billion. Fortunately, revenue is the easier part as Costco releases monthly figures. Through the first two months of the third quarter. So far, sales are $18.99 billion, which translates to 8.1% YoY growth. If the trend holds in May, then it is possible that sales could fall slightly short of expectations, in the neighborhood of $25.5 billion, which is close to the low estimate of $25.35 billion Q3.

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If COST's revenue were to come in at $25.5 billion and the seconds quarter's net margin carried over, then earnings per share would be $1.04; the same as last year.

Overall: It's been a tough quarter for many retailers due harsh winter conditions for most of the country. Costco Wholesale Corporation (COST) could be yet another polar vortex victim as the iEstimate, COST's recent bearish surprise history and hypothetical earnings model suggest.