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

Zacks Equity Research
·3 min read

Costco (COST) closed the most recent trading day at $366.62, moving +0.44% from the previous trading session. The stock outpaced the S&P 500's daily loss of 0.14%. At the same time, the Dow added 0.9%, and the tech-heavy Nasdaq lost 1.37%.

Coming into today, shares of the warehouse club operator had lost 3.05% in the past month. In that same time, the Retail-Wholesale sector lost 1.79%, while the S&P 500 gained 2.25%.

Wall Street will be looking for positivity from COST as it approaches its next earnings report date. The company is expected to report EPS of $1.97, up 13.87% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $41.90 billion, up 13.12% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $9.62 per share and revenue of $180.94 billion, which would represent changes of +8.7% and +8.5%, respectively, from the prior year.

Any recent changes to analyst estimates for COST should also be noted by investors. 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. 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. Within the past 30 days, our consensus EPS projection has moved 0.58% higher. COST is currently sporting a Zacks Rank of #3 (Hold).

In terms of valuation, COST is currently trading at a Forward P/E ratio of 37.94. This represents a premium compared to its industry's average Forward P/E of 21.58.

Meanwhile, COST's PEG ratio is currently 4.47. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Retail - Discount Stores was holding an average PEG ratio of 2.99 at yesterday's closing price.

The Retail - Discount Stores industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 210, which puts it in the bottom 18% 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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