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

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Costco (COST - Free Report) closed the most recent trading day at $310.59, moving +1.52% from the previous trading session. This move outpaced the S&P 500's daily gain of 0.01%. At the same time, the Dow lost 0.45%, and the tech-heavy Nasdaq gained 0.78%.

Wall Street will be looking for positivity from COST as it approaches its next earnings report date. This is expected to be May 28, 2020. In that report, analysts expect COST to post earnings of $1.99 per share. This would mark year-over-year growth of 5.29%. Our most recent consensus estimate is calling for quarterly revenue of $37.45 billion, up 7.79% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $8.72 per share and revenue of $163.09 billion. These totals would mark changes of +6.47% and +6.8%, 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 such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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 1.37% lower. COST is currently sporting a Zacks Rank of #3 (Hold).

Digging into valuation, COST currently has a Forward P/E ratio of 35.1. For comparison, its industry has an average Forward P/E of 26.53, which means COST is trading at a premium to the group.

We can also see that COST currently has a PEG ratio of 4.07. 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 industry currently had an average PEG ratio of 2.82 as of yesterday's close.

The Retail - Discount Stores industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 219, which puts it in the bottom 14% 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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