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

Costco (COST) closed the most recent trading day at $344.71, moving +0.17% from the previous trading session. This move lagged the S&P 500's daily gain of 0.36%. Elsewhere, the Dow lost 0.21%, while the tech-heavy Nasdaq added 0.76%.

Prior to today's trading, shares of the warehouse club operator had gained 5.05% over the past month. This has lagged the Retail-Wholesale sector's gain of 9.43% and the S&P 500's gain of 6.9% in that time.

COST will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $2.80, up 4.09% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $51.99 billion, up 9.45% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $8.54 per share and revenue of $165.17 billion, which would represent changes of +4.27% and +8.17%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for COST. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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. Over the past month, the Zacks Consensus EPS estimate has moved 1.55% higher. COST is currently sporting a Zacks Rank of #3 (Hold).

Looking at its valuation, COST is holding a Forward P/E ratio of 40.3. Its industry sports an average Forward P/E of 22.17, so we one might conclude that COST is trading at a premium comparatively.

Investors should also note that COST has a PEG ratio of 4.8 right now. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Retail - Discount Stores industry currently had an average PEG ratio of 2.97 as of yesterday's close.

The Retail - Discount Stores industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 52, which puts it in the top 21% 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

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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.

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