Costco (COST) Laps the Stock Market: Here's Why

Zacks
Yesterday

The latest trading session saw Costco (COST) ending at $991.70, denoting a +1.34% adjustment from its last day's close. This change outpaced the S&P 500's 0.58% gain on the day. Elsewhere, the Dow saw an upswing of 0.75%, while the tech-heavy Nasdaq appreciated by 0.55%.

Shares of the warehouse club operator have appreciated by 3.46% over the course of the past month, outperforming the Retail-Wholesale sector's loss of 0.19% and the S&P 500's loss of 0.84%.

The investment community will be paying close attention to the earnings performance of Costco in its upcoming release. The company is slated to reveal its earnings on May 29, 2025. In that report, analysts expect Costco to post earnings of $4.24 per share. This would mark year-over-year growth of 12.17%. Our most recent consensus estimate is calling for quarterly revenue of $62.97 billion, up 7.61% from the year-ago period.

For the entire fiscal year, the Zacks Consensus Estimates are projecting earnings of $17.95 per share and a revenue of $274.23 billion, representing changes of +11.42% and +7.77%, respectively, from the prior year.

Investors should also pay attention to any latest changes in analyst estimates for Costco. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To exploit this, we've formed the Zacks Rank, a quantitative model that includes these estimate changes and presents a viable 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 shifted 0.06% upward. Costco is currently sporting a Zacks Rank of #3 (Hold).

Digging into valuation, Costco currently has a Forward P/E ratio of 54.51. Its industry sports an average Forward P/E of 21.76, so one might conclude that Costco is trading at a premium comparatively.

We can additionally observe that COST currently boasts a PEG ratio of 5.84. 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. The Retail - Discount Stores industry had an average PEG ratio of 2.71 as trading concluded yesterday.

The Retail - Discount Stores industry is part of the Retail-Wholesale sector. At present, this industry carries a Zacks Industry Rank of 83, placing it within the top 34% of over 250 industries.

The strength of our individual industry groups is measured by the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within these 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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This article originally published on Zacks Investment Research (zacks.com).

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