Back to top

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

Read MoreHide Full Article

In the latest trading session, Costco (COST - Free Report) closed at $288.51, marking a +0.21% move from the previous day. This move lagged the S&P 500's daily gain of 0.62%. At the same time, the Dow added 0.61%, and the tech-heavy Nasdaq gained 1.05%.

Heading into today, shares of the warehouse club operator had lost 1.53% over the past month, lagging the Retail-Wholesale sector's gain of 2.71% and the S&P 500's gain of 3.85% in that time.

Investors will be hoping for strength from COST as it approaches its next earnings release, which is expected to be October 3, 2019. On that day, COST is projected to report earnings of $2.54 per share, which would represent year-over-year growth of 7.63%. Our most recent consensus estimate is calling for quarterly revenue of $47.26 billion, up 6.41% from the year-ago period.

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. With this in mind, we can consider positive estimate revisions a sign of optimism about 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 0.06% higher. COST is currently a Zacks Rank #3 (Hold).

In terms of valuation, COST is currently trading at a Forward P/E ratio of 33.83. For comparison, its industry has an average Forward P/E of 23.19, which means COST is trading at a premium to the group.

Meanwhile, COST's PEG ratio is currently 3.81. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The Retail - Discount Stores was holding an average PEG ratio of 2.32 at yesterday's closing price.

The Retail - Discount Stores industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 33, putting it in the top 13% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Costco Wholesale Corporation (COST) - free report >>

Published in