U.S. Markets close in 4 hrs 18 mins

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

Zacks Equity Research

Costco (COST) closed at $300.84 in the latest trading session, marking a -0.59% move from the prior day. This change lagged the S&P 500's daily loss of 0.2%. At the same time, the Dow added 0.04%, and the tech-heavy Nasdaq lost 0.13%.

Coming into today, shares of the warehouse club operator had gained 1.84% in the past month. In that same time, the Retail-Wholesale sector gained 6.5%, while the S&P 500 gained 7.08%.

COST will be looking to display strength as it nears its next earnings release. On that day, COST is projected to report earnings of $1.71 per share, which would represent year-over-year growth of 6.21%. Our most recent consensus estimate is calling for quarterly revenue of $37.43 billion, up 6.72% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $8.62 per share and revenue of $162.93 billion. These totals would mark changes of +5.25% and +6.7%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for COST. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an 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 0.18% higher. COST currently has a Zacks Rank of #2 (Buy).

Digging into valuation, COST currently has a Forward P/E ratio of 35.1. This represents a premium compared to its industry's average Forward P/E of 23.29.

We can also see that COST currently has a PEG ratio of 4.13. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. Retail - Discount Stores stocks are, on average, holding a PEG ratio of 2.36 based on yesterday's closing prices.

The Retail - Discount Stores industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 51, which puts it in the top 20% 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.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Costco Wholesale Corporation (COST) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research