Costco and AutoZone are part of Zacks Earnings Preview

For Immediate Release

Chicago, IL – June 2, 2025 – Zacks.com releases the list of companies likely to issue earnings surprises. This week’s list includes Costco COST and AutoZone AZO.

Making Sense of Q2 Earnings Expectations

We count the Costco and AutoZone releases for their respective fiscal quarters ending in May as part of our June-quarter tally.

As such, the AutoZone and Costco quarterly reports have kicked off the Q2 earnings season for us, even though we still have a few Q1 earnings releases to await. In fact, by the time the big banks put the spotlight on the Q2 reporting cycle by releasing their June-quarter results on July 14^th, we will have seen such May-quarter results from more than two dozen S&P 500 members.

Costco handily beat consensus estimates for earnings, revenues, and same-store sales (comps). Same-store sales for the quarter were up +8%, excluding gasoline and the impact of foreign exchange fluctuations. This follows +9.1% comp growth in the preceding period relative to estimates of +6.3%.

Of particular significance is the high single-digit comp growth in Costco’s non-food merchandise, which can be compared to the discretionary or general merchandise categories at other retailers, such as Walmart and Target. A significant part of Costco’s discretionary strength likely reflects the retailer’s high-income customer base, but it is also likely gaining market share in these product categories.

Costco continues to execute well despite the tariff challenges. Management reiterated on the call that merchandise at the domestic business is mostly sourced from within the U.S., with only about a quarter of Costco U.S. sales dependent on imports.

Looking beyond Costco and AutoZone, the expectation is for Q2 earnings for the S&P 500 index to increase by +5.4% from the same period last year on +3.7% higher revenues. This will be a material deceleration from the +12% earnings growth in Q1 on +4.7% revenue growth.

We have been regularly flagging in recent weeks that 2025 Q2 earnings estimates have been steadily decreasing.

The magnitude of cuts to 2025 Q2 estimates since the start of the period is bigger and more widespread relative to what we have become used to seeing in the post-COVID period.

Since the start of April, Q2 estimates have declined for 15 of the 16 Zacks sectors (Aerospace is the only sector whose estimates have increased), with the largest cuts to the Transportation, Autos, Energy, Basic Materials, and Construction sectors.

Estimates for the Tech and Finance sectors, the largest contributors to the S&P 500 index, which account for more than 50% of all index earnings, have also been cut since the quarter began. But as we have been pointing out in recent weeks, the revisions trend for the Tech sector has notably stabilized.

A likely explanation for this stabilization in the revisions trend is the easing in the tariff uncertainty after the more punitive version of the tariff regime was delayed. Analysts started revising their estimates lower in the immediate aftermath of the early April tariff announcements, but appear to have since concluded that those punitive tariff levels are unlikely to get levied, helping stabilize the revisions trend.

The Q1 Earnings Scorecard

As we noted earlier, the Q1 earnings season isn’t over yet. Through Friday, May 30^th, we have seen Q1 results from 490 S&P 500 members or 98% of the index’s total membership.

Total earnings for these 490 index members that have reported results are up +11.9% from the same period last year on +4.8% revenue gains, with 74.1% of the companies beating EPS estimates and 63.3% beating revenue estimates.

The EPS and revenue beats percentages are tracking below historical averages, with the Q1 EPS beats percentage of 74.1% compared to the average for the same group of 78.4% over the preceding 20-quarter period (5 years). The Q1 revenue beat percentage of 63.3% compared to the 5-year average for this group of index members of 71.2%.

For a detailed view of the evolving earnings picture, please check out our weekly Earnings Trends report here >> Analyzing the Current Earnings Outlook

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