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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 $275.68, moving +0.99% from the previous trading session. This change outpaced the S&P 500's 0.83% gain on the day. Elsewhere, the Dow gained 0.93%, while the tech-heavy Nasdaq added 0.9%.

Heading into today, shares of the warehouse club operator had lost 2.55% over the past month, outpacing the Retail-Wholesale sector's loss of 2.72% and lagging the S&P 500's loss of 2.38% in that time.

Investors will be hoping for strength from COST as it approaches 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%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $47.18 billion, up 6.24% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $8.04 per share and revenue of $152.45 billion. These totals would mark changes of +17.72% and +7.68%, respectively, from last 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. As a result, we can interpret positive estimate revisions as a good sign for 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.

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. Over the past month, the Zacks Consensus EPS estimate has moved 0.04% higher. COST currently has a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that COST has a Forward P/E ratio of 33.95 right now. This represents a premium compared to its industry's average Forward P/E of 21.17.

Investors should also note that COST has a PEG ratio of 3.83 right now. 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. Retail - Discount Stores stocks are, on average, holding a PEG ratio of 1.91 based on yesterday's closing prices.

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 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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