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

Zacks Equity Research

Costco (COST) closed the most recent trading day at $297.05, moving -0.09% from the previous trading session. This change lagged the S&P 500's 0.19% gain on the day. Elsewhere, the Dow lost 0.11%, while the tech-heavy Nasdaq added 0.81%.

Heading into today, shares of the warehouse club operator had gained 3.05% over the past month, outpacing the Retail-Wholesale sector's loss of 0.29% and the S&P 500's gain of 0.56% 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 $1.71 per share, which would represent year-over-year growth of 6.21%. Meanwhile, our latest consensus estimate is calling for revenue of $37.36 billion, up 6.54% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $8.60 per share and revenue of $162.81 billion, which would represent changes of +5.01% and +6.62%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for COST. These revisions help to show the ever-changing nature of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about 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. The Zacks Consensus EPS estimate has moved 1.07% higher within the past month. COST is currently sporting a Zacks Rank of #2 (Buy).

Valuation is also important, so investors should note that COST has a Forward P/E ratio of 34.56 right now. This represents a premium compared to its industry's average Forward P/E of 23.77.

Investors should also note that COST has a PEG ratio of 4.07 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. COST's industry had an average PEG ratio of 2.45 as of yesterday's close.

The Retail - Discount Stores industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 57, putting it in the top 23% 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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