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Costco (COST) Outpaces Stock Market Gains: What You Should Know

Zacks Equity Research

Costco (COST) closed the most recent trading day at $271.52, moving +1.26% from the previous trading session. This change outpaced the S&P 500's 0.25% gain on the day. Elsewhere, the Dow gained 0.39%, while the tech-heavy Nasdaq lost 0.09%.

Prior to today's trading, shares of the warehouse club operator had lost 4.76% over the past month. This has was narrower than the Retail-Wholesale sector's loss of 6.94% and the S&P 500's loss of 5.58% in that time.

COST will be looking to display strength as it nears its next earnings release. On that day, COST is projected to report earnings of $2.53 per share, which would represent year-over-year growth of 7.2%. Our most recent consensus estimate is calling for quarterly revenue of $47.18 billion, up 6.24% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $8.04 per share and revenue of $152.45 billion, which would represent changes of +17.72% and +7.68%, respectively, from the prior year.

Any recent changes to analyst estimates for COST should also be noted by investors. 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. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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 0.04% higher within the past month. COST is currently sporting a Zacks Rank of #3 (Hold).

Digging into valuation, COST currently has a Forward P/E ratio of 33.35. Its industry sports an average Forward P/E of 20.69, so we one might conclude that COST is trading at a premium comparatively.

Also, we should mention that COST has a PEG ratio of 3.76. 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 was holding an average PEG ratio of 1.85 at yesterday's closing price.

The Retail - Discount Stores industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 56, putting it in the top 22% 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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