Costco (NASDAQ:COST) has always been an outlier. While many of its competitors have suffered volatile trading sentiment, Costco stock has largely kept trekking upward. This year is no exception, with COST shares gaining over 24% year-to-date.

But Costco’s fiscal fourth-quarter 2018 earnings report looms on the horizon, and this has significant implications for COST stock. The big-box retailer is currently enjoying a five-quarter earnings-beat streak

Costco will report earnings Thursday after market close.

And momentum and history — Costco hasn’t missed in Q4 since 2015 — indicates that the company will score another win.

Of course, it won’t be easy, and it’s no guarantee. While Costco stock is the unquestioned king among membership-only warehouses, it has significant competition from Walmart (NYSE:WMT) and Target (NYSE:TGT). Both have revamped their stores over the years to compete in the Amazon (NASDAQ:AMZN) era.

Target in particular has seen a resurgence since the spring of 2017. On a year-to-date basis, TGT has jumped almost 35%. Shares aren’t rising just on speculation alone. Target is returning back to growth after a few years of lackluster performance. So while COST stock has withstood competition well, the underlying firm cannot ignore the resurgent big-box retail market.

To that end, Costco management has introduced compelling changes to its business, particularly in the e-commerce segment. Costco members now get free two-day deliveries for non-perishable food items and household supplies for $75 orders and above. Those under the threshold can still enjoy the two-day deliveries for a fee. For many metropolitan members, Costco also offers same-day delivery.

Obviously, this initiative allows COST to combat the Amazon-effect. It’s also a direct shot against Walmart and Target, both of which have focused aggressively on their online channels.

Will this add up to an earnings beat? Let’s drill into the numbers:

Positive Momentum and Tailwinds Should Drive Costco Stock to a Beat

Ambitious targets are in place for COST stock heading into Q4. However, given the company’s position in the retail market, and prior earnings momentum, I believe another beat is in store.

Consensus estimates call for an earnings per share of $2.36. Individual estimates range from $2.18 to $2.53. In the prior-year quarter, Costco delivered an EPS of $2.08. Should the big-box retailer at least match expectations, this would represent a 13.5% year-over-year lift.

It’s likely that Costco stock will bring home the goods again in Q4. Revenue growth over the last four years averaged nearly 4.7% — with most of that coming last year. More importantly, from a profitability standpoint management has maintained fiscal discipline. Costs and expenses have largely matched the growth curve, keeping margins steady and predictable.

Segueing into the revenue picture, covering analysts anticipate revenues of $44.3 billion. Individual estimates have ranged from $42.9 billion to $45.6 billion. In the year-ago quarter, Costco rang up $42.3 billion.

Although the 4.7% YOY lift is ambitious, it’s not at all unreasonable. Last quarter, the company produced a 12% gain over Q3 2017 results. Not only that, Costco stock has benefited from a broad revenue distribution.

In Q3 2018, Costco saw its e-commerce sales jump 37%. This proves that the online focus isn’t just a novelty act, and that it resonates with consumers. Moreover, management has its eyes not only on e-commerce expansion domestically, but internationally as well.

This has the added benefit of helping to negate Amazon’s international presence. As a benefit of membership, Costco shoppers already enjoy low prices, and Amazon-proof perks, such as cheaper gasoline. When you throw in the mix of online-shopping convenience? Costco stock is too attractive to ignore.

Immediacy Factor Boosts COST stock

Management’s shift in building its online ecosystem is smart for another reason: the move is a one-way street, at least as far as how Amazon can respond.

Amazon has completely disrupted the broader retail market because of the convenience factor. Consumers no longer have to sit in traffic, fight for parking or wait in long lines. They can have everything they want through the convenience of a mouse click (and a credit card).

But Costco and select other retailers still benefit from the immediacy factor. Nothing beats getting what you want right now. Sure, Amazon can expand same-day delivery options but for many customers, costs can become prohibitive.

Additionally, being able to see what you’re buying is a huge benefit for COST stock. This concept applies especially to Costco’s food sales. People are usually particular about what they put into their bodies.

Overall, I think Costco has a great chance to surprise in Q4. They’ve responded effectively to competitor challenges, and they have a proven history of exceeding expectations.

As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.