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

Costco (COST) closed the most recent trading day at $961.85, moving +1.29% from the previous trading session. The stock's change was more than the S&P 500's daily gain of 0.65%. Meanwhile, the Dow experienced a rise of 0.13%, and the technology-dominated Nasdaq saw an increase of 0.81%.

Shares of the warehouse club operator have appreciated by 3.6% over the course of the past month, underperforming the Retail-Wholesale sector's gain of 4.78%, and outperforming the S&P 500's gain of 2.38%.

Market participants will be closely following the financial results of Costco in its upcoming release. On that day, Costco is projected to report earnings of $6.51 per share, which would represent year-over-year growth of 10.9%. Alongside, our most recent consensus estimate is anticipating revenue of $94.46 billion, indicating a 9.64% upward movement from the same quarter last year.

For the full year, the Zacks Consensus Estimates project earnings of $20.42 per share and a revenue of $301.94 billion, demonstrating changes of +13.51% and +9.7%, respectively, from the preceding year.

Investors should also take note of any recent adjustments to analyst estimates for Costco. Recent revisions tend to reflect the latest near-term business trends. As a result, upbeat changes in estimates indicate analysts' favorable outlook on the business health and profitability.

Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. To capitalize on this, we've crafted the Zacks Rank, a unique model that incorporates these estimate changes and offers a practical rating system.

The Zacks Rank system, which varies between #1 (Strong Buy) and #5 (Strong Sell), carries an impressive track record of exceeding expectations, confirmed by external audits, with stocks at #1 delivering an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.2% higher. Costco is currently sporting a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that Costco has a Forward P/E ratio of 46.49 right now. This denotes a premium relative to the industry average Forward P/E of 29.42.

One should further note that COST currently holds a PEG ratio of 4.52. The PEG ratio is akin to the commonly utilized P/E ratio, but this measure also incorporates the company's anticipated earnings growth rate. The average PEG ratio for the Retail - Discount Stores industry stood at 2.78 at the close of the market yesterday.

The Retail - Discount Stores industry is part of the Retail-Wholesale sector. This industry, currently bearing a Zacks Industry Rank of 80, finds itself in the top 33% echelons of all 250+ industries.

The Zacks Industry Rank evaluates the power of our distinct industry groups by determining the average Zacks Rank of the individual stocks forming the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Ensure to harness Zacks.com to stay updated with all these stock-shifting metrics, among others, in the next trading sessions.

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This article originally published on Zacks Investment Research (zacks.com).

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