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

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In the latest trading session, Costco (COST) closed at $541.30, marking a +0.95% move from the previous day. The stock lagged the S&P 500's daily gain of 1.42%. At the same time, the Dow added 0.97%, and the tech-heavy Nasdaq lost 0.07%.

Prior to today's trading, shares of the warehouse club operator had gained 11.87% over the past month. This has outpaced the Retail-Wholesale sector's gain of 7% and the S&P 500's gain of 6.69% in that time.

Wall Street will be looking for positivity from Costco as it approaches its next earnings report date. The company is expected to report EPS of $4.08, up 4.62% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $71.02 billion, up 13.32% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $13.08 per share and revenue of $225.88 billion. These totals would mark changes of +18.05% and +15.29%, respectively, from last year.

It is also important to note the 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.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.17% higher. Costco currently has a Zacks Rank of #2 (Buy).

Digging into valuation, Costco currently has a Forward P/E ratio of 40.99. This valuation marks a premium compared to its industry's average Forward P/E of 20.05.

Investors should also note that COST has a PEG ratio of 4.47 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. Retail - Discount Stores stocks are, on average, holding a PEG ratio of 1.79 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 213, which puts it in the bottom 16% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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