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

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Costco (COST - Free Report) closed the most recent trading day at $231.28, moving +0.12% from the previous trading session. This change lagged the S&P 500's 0.82% gain on the day. Elsewhere, the Dow gained 0.79%, while the tech-heavy Nasdaq added 0.79%.

Prior to today's trading, shares of the warehouse club operator had gained 0.61% over the past month. This has lagged the Retail-Wholesale sector's gain of 6.1% and the S&P 500's gain of 3.94% 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 $2.34, up 72.06% from the prior-year quarter. Our most recent consensus estimate is calling for quarterly revenue of $34.53 billion, up 8.57% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $7.71 per share and revenue of $152.40 billion. These totals would mark changes of +12.88% and +7.64%, respectively, from last year.

Investors might also notice 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.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, 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. Over the past month, the Zacks Consensus EPS estimate has moved 0.48% higher. COST currently has a Zacks Rank of #3 (Hold).

Digging into valuation, COST currently has a Forward P/E ratio of 29.97. For comparison, its industry has an average Forward P/E of 19.42, which means COST is trading at a premium to the group.

We can also see that COST currently has a PEG ratio of 2.94. 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 was holding an average PEG ratio of 1.56 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 102, which puts it in the top 40% 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 Zacks.com.




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