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Costco (COST) Dips More Than Broader Markets: What You Should Know

·3 min read

In the latest trading session, Costco (COST) closed at $519.11, marking a -1.9% move from the previous day. This change lagged the S&P 500's 1.07% loss on the day. At the same time, the Dow lost 1.07%, and the tech-heavy Nasdaq lost 0.07%.

Heading into today, shares of the warehouse club operator had lost 2.6% over the past month, lagging the Retail-Wholesale sector's loss of 1.62% and outpacing the S&P 500's loss of 3.49% in that time.

Costco will be looking to display strength as it nears its next earnings release, which is expected to be September 22, 2022. The company is expected to report EPS of $4.11, up 5.38% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $71.85 billion, up 14.64% from the prior-year quarter.

Investors might also notice recent changes to analyst estimates for Costco. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.61% higher. Costco is currently sporting a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that Costco has a Forward P/E ratio of 36.77 right now. Its industry sports an average Forward P/E of 21, so we one might conclude that Costco is trading at a premium comparatively.

It is also worth noting that COST currently has a PEG ratio of 4.01. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Retail - Discount Stores industry currently had an average PEG ratio of 2.06 as of yesterday's close.

The Retail - Discount Stores industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 219, which puts it in the bottom 14% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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