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Costco (COST) Gains As Market Dips: What You Should Know

Zacks Equity Research

Costco (COST) closed at $302.86 in the latest trading session, marking a +0.15% move from the prior day. The stock outpaced the S&P 500's daily loss of 0.39%. Elsewhere, the Dow lost 0.95%, while the tech-heavy Nasdaq lost 0.83%.

Heading into today, shares of the warehouse club operator had gained 5.06% over the past month, outpacing the Retail-Wholesale sector's loss of 0.14% and the S&P 500's loss of 0.1% in that time.

Wall Street will be looking for positivity from COST as it approaches its next earnings report date. On that day, COST is projected to report earnings of $1.71 per share, which would represent year-over-year growth of 6.21%. Meanwhile, our latest consensus estimate is calling for revenue of $37.36 billion, up 6.54% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $8.60 per share and revenue of $162.81 billion, which would represent changes of +5.01% and +6.62%, respectively, from the prior year.

Any recent changes to analyst estimates for COST should also be noted by investors. 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.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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 1.07% higher. COST is currently a Zacks Rank #2 (Buy).

Digging into valuation, COST currently has a Forward P/E ratio of 35.15. For comparison, its industry has an average Forward P/E of 23.95, which means COST is trading at a premium to the group.

It is also worth noting that COST currently has a PEG ratio of 4.14. 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. COST's industry had an average PEG ratio of 2.48 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 13, which puts it in the top 6% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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.

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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