Costco Wholesale Corporation (COST) Hits Fresh High: Is There Still Room to Run?

Have you been paying attention to shares of Costco (COST)? Shares have been on the move with the stock up 6.2% over the past month. The stock hit a new 52-week high of $962 in the previous session. Costco has gained 43% since the start of the year compared to the 26.6% move for the Zacks Retail-Wholesale sector and the 23% return for the Zacks Retail - Discount Stores industry.What's Driving the Outperformance?The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on September 26, 2024, Costco reported EPS of $5.15 versus consensus estimate of $5.05 while it missed the consensus revenue estimate by 0.07%.For the current fiscal year, Costco is expected to post earnings of $17.75 per share on $273.33 billion in revenues. This represents a 10.18% change in EPS on a 7.42% change in revenues. For the next fiscal year, the company is expected to earn $19.36 per share on $291.13 billion in revenues. This represents a year-over-year change of 9.03% and 6.51%, respectively.Valuation MetricsCostco may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.Costco has a Value Score of C. The stock's Growth and Momentum Scores are B and D, respectively, giving the company a VGM Score of B.In terms of its value breakdown, the stock currently trades at 53.2X current fiscal year EPS estimates, which is a premium to the peer industry average of 20.1X. On a trailing cash flow basis, the stock currently trades at 44.5X versus its peer group's average of 16.8X. Additionally, the stock has a PEG ratio of 5.82. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.Zacks RankWe also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Costco currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Costco passes the test. Thus, it seems as though Costco shares could have a bit more room to run in the near term.How Does COST Stack Up to the Competition?Shares of COST have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Burlington Stores, Inc. (BURL). BURL has a Zacks Rank of # 2 (Buy) and a Value Score of B, a Growth Score of A, and a Momentum Score of F.Earnings were strong last quarter. Burlington Stores, Inc. beat our consensus estimate by 26.32%, and for the current fiscal year, BURL is expected to post earnings of $7.91 per share on revenue of $10.71 billion.Shares of Burlington Stores, Inc. have gained 4.3% over the past month, and currently trade at a forward P/E of 33.28X and a P/CF of 23.92X.The Retail - Discount Stores industry is in the top 14% of all the industries we have in our universe, so it looks like there are some nice tailwinds for COST and BURL, even beyond their own solid fundamental situation.Free Report: 5 Clean Energy Stocks with Massive UpsideEnergy is the backbone of our economy. It’s a multi-trillion dollar industry that has created some of the world’s largest and most profitable companies.Now state-of-the-art technology is paving the way for clean energy sources to overtake “old-fashioned” fossil fuels. Trillions of dollars are already pouring into clean energy initiatives, from solar power to hydrogen fuel cells.Emerging leaders from this space could be some of the most exciting stocks in your portfolio.Download Nuclear to Solar: 5 Stocks Powering the Future to see Zacks’ top picks free today.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Costco Wholesale Corporation (COST): Free Stock Analysis Report Burlington Stores, Inc. (BURL): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks