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

·3 min read

Costco (COST) closed at $508 in the latest trading session, marking a -0.45% move from the prior day. This change lagged the S&P 500's 0.34% gain on the day. At the same time, the Dow added 0.1%, and the tech-heavy Nasdaq lost 0.05%.

Coming into today, shares of the warehouse club operator had lost 7.72% in the past month. In that same time, the Retail-Wholesale sector lost 6.76%, while the S&P 500 lost 7.95%.

Wall Street will be looking for positivity from Costco as it approaches its next earnings report date. This is expected to be September 22, 2022. On that day, Costco is projected to report earnings of $4.11 per share, which would represent year-over-year growth of 5.38%. Our most recent consensus estimate is calling for quarterly revenue of $71.84 billion, up 14.63% from the year-ago period.

Any recent changes to analyst estimates for Costco 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.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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 0.18% higher. Costco currently has a Zacks Rank of #3 (Hold).

Investors should also note Costco's current valuation metrics, including its Forward P/E ratio of 35.55. Its industry sports an average Forward P/E of 20.78, so we one might conclude that Costco is trading at a premium comparatively.

Investors should also note that COST has a PEG ratio of 3.85 right now. 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 2.03 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 228, which puts it in the bottom 10% 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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