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Costco (COST) Gains But Lags Market: What You Should Know

Zacks Equity Research
Marathon Petroleum (MPC) closed at $51.39 in the latest trading session, marking a -0.41% move from the prior day.

In the latest trading session, Costco (COST) closed at $242.73, marking a +0.33% move from the previous day. This move lagged the S&P 500's daily gain of 0.8%. At the same time, the Dow added 0.82%, and the tech-heavy Nasdaq gained 1.14%.

Heading into today, shares of the warehouse club operator had lost 1.79% over the past month, outpacing the Retail-Wholesale sector's loss of 3.96% and the S&P 500's loss of 3.2% in that time.

Wall Street will be looking for positivity from COST as it approaches its next earnings report date. This is expected to be May 30, 2019. The company is expected to report EPS of $1.82, up 7.06% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $34.80 billion, up 7.53% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $7.92 per share and revenue of $152.26 billion, which would represent changes of +15.96% and +7.55%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for COST. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. The Zacks Consensus EPS estimate has moved 0.21% higher within the past month. COST is currently a Zacks Rank #3 (Hold).

Digging into valuation, COST currently has a Forward P/E ratio of 30.54. For comparison, its industry has an average Forward P/E of 20.09, which means COST is trading at a premium to the group.

Investors should also note that COST has a PEG ratio of 3.41 right now. 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. The Retail - Discount Stores industry currently had an average PEG ratio of 1.89 as of yesterday's close.

The Retail - Discount Stores industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 108, putting it in the top 43% 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.

To follow COST in the coming trading sessions, be sure to utilize Zacks.com.


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