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Costco (COST) Outpaces Stock Market Gains: What You Should Know

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Costco (COST - Free Report) closed at $234.45 in the latest trading session, marking a +1.86% move from the prior day. This move outpaced the S&P 500's daily gain of 0.56%. Meanwhile, the Dow gained 0.76%, and the Nasdaq, a tech-heavy index, lost 0.38%.

Prior to today's trading, shares of the warehouse club operator had lost 0.66% over the past month. This has was narrower than the Retail-Wholesale sector's loss of 5.98% and the S&P 500's loss of 6.76% in that time.

COST will be looking to display strength as it nears its next earnings release, which is expected to be December 13, 2018. The company is expected to report EPS of $1.60, up 17.65% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $34.24 billion, up 7.66% from the prior-year quarter.

COST's full-year Zacks Consensus Estimates are calling for earnings of $7.70 per share and revenue of $151.89 billion. These results would represent year-over-year changes of +12.74% and +7.28%, respectively.

It is also important to note the recent changes to analyst estimates for COST. These recent revisions tend to reflect the evolving nature of short-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. 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.

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. Within the past 30 days, our consensus EPS projection has moved 0.29% lower. COST is holding a Zacks Rank of #3 (Hold) right now.

Valuation is also important, so investors should note that COST has a Forward P/E ratio of 29.89 right now. For comparison, its industry has an average Forward P/E of 22.33, which means COST is trading at a premium to the group.

It is also worth noting that COST currently has a PEG ratio of 2.94. 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 was holding an average PEG ratio of 1.7 at yesterday's closing price.

The Retail - Discount Stores industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 92, which puts it in the top 36% 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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