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

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In the latest trading session, Costco (COST - Free Report) closed at $342.92, marking a +1.12% move from the previous day. This move lagged the S&P 500's daily gain of 1.27%. Elsewhere, the Dow gained 1.18%, while the tech-heavy Nasdaq added 1.87%.

Heading into today, shares of the warehouse club operator had gained 1.02% over the past month, lagging the Retail-Wholesale sector's gain of 2.76% and outpacing the S&P 500's gain of 0.37% in that time.

Investors will be hoping for strength from COST as it approaches its next earnings release, which is expected to be September 24, 2020. In that report, analysts expect COST to post earnings of $2.85 per share. This would mark year-over-year growth of 5.95%. Our most recent consensus estimate is calling for quarterly revenue of $52.61 billion, up 10.76% from the year-ago period.

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 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.

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. Over the past month, the Zacks Consensus EPS estimate has moved 0.79% higher. COST currently has a Zacks Rank of #3 (Hold).

Investors should also note COST's current valuation metrics, including its Forward P/E ratio of 35.94. This valuation marks a premium compared to its industry's average Forward P/E of 21.05.

Investors should also note that COST has a PEG ratio of 4.28 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. Retail - Discount Stores stocks are, on average, holding a PEG ratio of 2.86 based on yesterday's closing prices.

The Retail - Discount Stores industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 69, which puts it in the top 28% 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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