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

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Costco (COST) closed at $310.68 in the latest trading session, marking a -0.99% move from the prior day. This change lagged the S&P 500's 0.17% gain on the day. Elsewhere, the Dow 0%, while the tech-heavy Nasdaq added 0.11%.

Coming into today, shares of the warehouse club operator had gained 4.64% in the past month. In that same time, the Retail-Wholesale sector gained 2.9%, while the S&P 500 gained 2.78%.

COST will be looking to display strength as it nears its next earnings release, which is expected to be March 5, 2020. On that day, COST is projected to report earnings of $2.06 per share, which would represent year-over-year growth of 2.49%. Our most recent consensus estimate is calling for quarterly revenue of $38.34 billion, up 8.31% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $8.61 per share and revenue of $162.96 billion. These totals would mark changes of +5.13% and +6.72%, respectively, from last year.

Any recent changes to analyst estimates for COST should also be noted by investors. These revisions help to show the ever-changing nature of 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. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 0.21% higher. COST is currently a Zacks Rank #2 (Buy).

Digging into valuation, COST currently has a Forward P/E ratio of 36.46. For comparison, its industry has an average Forward P/E of 21.31, which means COST is trading at a premium to the group.

Investors should also note that COST has a PEG ratio of 4.5 right now. 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. COST's industry had an average PEG ratio of 1.93 as of yesterday's close.

The Retail - Discount Stores industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 163, putting it in the bottom 37% 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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