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

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Zacks Equity Research
·3 min read
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Costco (COST) closed the most recent trading day at $361.30, moving +1.93% from the previous trading session. The stock outpaced the S&P 500's daily gain of 1.39%. Elsewhere, the Dow gained 0.83%, while the tech-heavy Nasdaq added 1.97%.

Coming into today, shares of the warehouse club operator had lost 2.09% in the past month. In that same time, the Retail-Wholesale sector lost 0.97%, while the S&P 500 gained 2.58%.

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 $2.37 per share, which would represent year-over-year growth of 12.86%. Meanwhile, our latest consensus estimate is calling for revenue of $43.53 billion, up 11.41% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $9.95 per share and revenue of $184.12 billion. These totals would mark changes of +12.43% and +10.41%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for COST. These revisions typically reflect the latest short-term business trends, which can change frequently. 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. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an 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. The Zacks Consensus EPS estimate has moved 0.15% higher within the past month. COST is holding a Zacks Rank of #3 (Hold) right now.

Valuation is also important, so investors should note that COST has a Forward P/E ratio of 36.41 right now. Its industry sports an average Forward P/E of 21.46, so we one might conclude that COST is trading at a premium comparatively.

It is also worth noting that COST currently has a PEG ratio of 4.17. 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 2.53 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 51, putting it in the top 20% 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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Zacks Investment Research