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Costco (COST) Stock Sinks As 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 $355.21, moving -0.1% from the previous trading session. This change lagged the S&P 500's daily gain of 0.1%. Meanwhile, the Dow gained 0.12%, and the Nasdaq, a tech-heavy index, lost 0.02%.

COST will be looking to display strength as it nears its next earnings release. In that report, analysts expect COST to post earnings of $2.37 per share. This would mark year-over-year growth of 12.86%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $43.53 billion, up 11.41% from the year-ago period.

COST's full-year Zacks Consensus Estimates are calling for earnings of $9.95 per share and revenue of $184.12 billion. These results would represent year-over-year changes of +12.43% and +10.41%, respectively.

Any recent changes to analyst estimates for COST should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.15% higher within the past month. COST is currently sporting a Zacks Rank of #3 (Hold).

In terms of valuation, COST is currently trading at a Forward P/E ratio of 35.24. Its industry sports an average Forward P/E of 22.76, 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 4.04. 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 2.4 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 105, putting it in the top 42% 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.

To follow COST in the coming trading sessions, be sure to utilize Zacks.com.

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Zacks Investment Research