Analyst Report: Costco Showing Strength Following Stellar Earnings, Wall Street Applauds

reported exceptional 2015 fiscal year second-quarter earnings, beating analyst expectations. Revenue was reported at $27.45 billion, up 4 percent from last quarter. EPS was reported at $1.35, exceeding analyst expectations of $1.18 per share. Profits may have been aided by the

, according to the Wall Street Journal, as customers were left with more disposable income.

"Costco delivered one of its strongest quarters in recent memory," Sterne Agee analyst

Grom continued by stating that the P/E beat expectations by the largest margin in 13+ years.

Following the earnings report, four Wall Street firms reviewed Costco Wholesale Corporation.

Outperform with a $165 price target. "We believe that Costco's low GM percentage (12 percent ex-fuel) combined with product nimbleness and growing convenience supports an outlook for the company to remain highly relevant in a fast-changing consumer environment. Costco's unique membership-based business model, strong ROIC & healthy balance sheet support its premium valuation which we expect to maintain stable."

Outperform with a $165 price target. "We believe Costco is well positioned to continue delivering double-digit earnings growth over the near to medium term driven by square footage growth, steady membership revenue growth and positive same-store sales comps. Costco's higher income customer base (average household income of approximately $96,000) is faring better economically than low- to middle-income consumers, who continue to struggle with wage growth. We believe superb price/value, luxury product and streamlined assortment helps drive a sustainable high-margin membership stream."

Neutral with a $153 price target. "With MFI coming in slightly below UBS and the Street, COST again beat expectations by a comfortable margin on retail operations. Excluding MFI, COST's operating income was $295 mm, 30 percent ahead of our estimate of $227 mm due to the gross margin beat. GM was the highest it has been since 1Q'11. We think it likely continued to benefit from lower fuel prices and the resulting impact on mix, as well as from COST's ability to keep a bit more of the margin on fuel."

Outperform with a $160 price target. "COST delivered a healthy quarter in terms of sales and earnings. Gasoline negatively impacted store comps and ticket, but helped the company overall by contributing to significant gross margin improvement. Membership income grew 5.8 percent year-over-year to $582 million, helped by continued strength in new member sign ups, which rose 9 percent despite fewer new openings relative to 2Q14, and sustained performance in renewal rates (91 percent in US and Canada, 88 percent worldwide). COST remains one of the few conventional retailers that continues to deliver positive traffic, market share gains, and a validated model for international expansion. "

Costco Wholesale Corporation is currently trading at $149.62, down 1.03 percent.