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

In the latest trading session, Costco (COST) closed at $496.87, marking a +1.1% move from the previous day. The stock lagged the S&P 500's daily gain of 1.44%. Elsewhere, the Dow gained 1.26%, while the tech-heavy Nasdaq added 5.21%.

Prior to today's trading, shares of the warehouse club operator had gained 1.19% over the past month. This has lagged the Retail-Wholesale sector's gain of 2.17% and the S&P 500's gain of 2.28% in that time.

Costco will be looking to display strength as it nears its next earnings release. On that day, Costco is projected to report earnings of $3.36 per share, which would represent year-over-year growth of 5.99%. Our most recent consensus estimate is calling for quarterly revenue of $55.03 billion, up 4.62% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $14.38 per share and revenue of $242.19 billion, which would represent changes of +9.44% and +6.71%, respectively, from the prior year.

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It is also important to note the recent changes to analyst estimates for Costco. 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. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an 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. Within the past 30 days, our consensus EPS projection has moved 0.8% higher. Costco is holding a Zacks Rank of #3 (Hold) right now.

Investors should also note Costco's current valuation metrics, including its Forward P/E ratio of 34.17. This represents a premium compared to its industry's average Forward P/E of 21.41.

We can also see that COST currently has a PEG ratio of 3.7. 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 1.99 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 184, which puts it in the bottom 27% 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.

Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.

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Costco Wholesale Corporation (COST) : Free Stock Analysis Report

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Zacks Investment Research