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Costco (COST) Gains But Lags Market: What You Should Know

Costco (COST) closed the most recent trading day at $211.61, moving +0.2% from the previous trading session. This move lagged the S&P 500's daily gain of 0.47%. Meanwhile, the Dow gained 0.68%, and the Nasdaq, a tech-heavy index, added 0.74%.

Coming into today, shares of the warehouse club operator had gained 2.02% in the past month. In that same time, the Retail-Wholesale sector gained 6.95%, while the S&P 500 gained 7.71%.

Investors will be hoping for strength from COST as it approaches its nex t earnings release. The company is expected to report EPS of $1.64, up 15.49% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $35.64 billion, up 8% from the prior-year quarter.

COST's full-year Zacks Consensus Estimates are calling for earnings of $7.65 per share and revenue of $152.78 billion. These results would represent year-over-year changes of +12.01% and +7.91%, respectively.

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.

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 0.06% higher within the past month. COST is currently a Zacks Rank #3 (Hold).

Investors should also note COST's current valuation metrics, including its Forward P/E ratio of 27.59. This valuation marks a premium compared to its industry's average Forward P/E of 18.75.

Meanwhile, COST's PEG ratio is currently 2.76. 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. The Retail - Discount Stores industry currently had an average PEG ratio of 1.46 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 64, putting it in the top 26% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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