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Costco (COST) Dips More Than Broader Markets: What You Should Know

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Costco (COST - Free Report) closed the most recent trading day at $335.70, moving -0.31% from the previous trading session. This change lagged the S&P 500's 0.21% loss on the day. Elsewhere, the Dow lost 0.29%, while the tech-heavy Nasdaq added 0.28%.

Prior to today's trading, shares of the warehouse club operator had gained 3.08% over the past month. This has lagged the Retail-Wholesale sector's gain of 3.47% and the S&P 500's gain of 6.24% in that time.

Investors will be hoping for strength from COST as it approaches its next earnings release. In that report, analysts expect COST to post earnings of $2.77 per share. This would mark year-over-year growth of 2.97%. Our most recent consensus estimate is calling for quarterly revenue of $51.31 billion, up 8.03% from the year-ago period.

COST's full-year Zacks Consensus Estimates are calling for earnings of $8.53 per share and revenue of $164.60 billion. These results would represent year-over-year changes of +4.15% and +7.79%, respectively.

Investors should also note any recent changes to analyst estimates for COST. Recent revisions tend to reflect the latest 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. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

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 0.8% higher. 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 39.5. This represents a premium compared to its industry's average Forward P/E of 26.73.

Also, we should mention that COST has a PEG ratio of 4.7. 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. Retail - Discount Stores stocks are, on average, holding a PEG ratio of 4.42 based on yesterday's closing prices.

The Retail - Discount Stores industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 187, putting it in the bottom 27% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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