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

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Costco (COST - Free Report) closed at $296.89 in the latest trading session, marking a +0.26% move from the prior day. This move lagged the S&P 500's daily gain of 1.3%. At the same time, the Dow added 1.41%, and the tech-heavy Nasdaq gained 1.75%.

Prior to today's trading, shares of the warehouse club operator had gained 7.95% over the past month. This has outpaced the Retail-Wholesale sector's gain of 3.12% and the S&P 500's gain of 0.46% 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. In that report, analysts expect COST to post earnings of $2.53 per share. This would mark year-over-year growth of 7.2%. Meanwhile, our latest consensus estimate is calling for revenue of $47.18 billion, up 6.24% from the prior-year quarter.

Investors might also notice recent changes to analyst estimates for COST. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection remained stagnant. COST is holding a Zacks Rank of #3 (Hold) right now.

Digging into valuation, COST currently has a Forward P/E ratio of 34.81. For comparison, its industry has an average Forward P/E of 22.22, which means COST is trading at a premium to the group.

It is also worth noting that COST currently has a PEG ratio of 3.92. 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. Retail - Discount Stores stocks are, on average, holding a PEG ratio of 2.13 based on yesterday's closing prices.

The Retail - Discount Stores industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 39, which puts it in the top 16% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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