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Should You Buy Costco Wholesale Corporation (COST) Stock Tuesday?

Tuesday, October 26, 2021 12:01 PM | InvestorsObserver Analysts
Should You Buy Costco Wholesale Corporation (COST) Stock Tuesday?

InvestorsObserver gives Costco Wholesale Corporation (COST) a weak valuation score of 15 from its analysis. The proprietary scoring system considers the underlying health of a company by analyzing its stock price, earnings, and growth rate. COST currently holds a better value than 15% of stocks based on these metrics. Long term investors focused on buying-and-holding should find the valuation ranking system most relevant when making investment decisions.

Valuation Rank - 15
COST gets a 15 Valuation Rank today. Find out what this means to you and get the rest of the rankings on COST!

Metrics Analysis

COST has a trailing twelve month Price to Earnings (PE) ratio of 26.1 which places it above the histroical average of roughly 15. COST is currently trading at a poor value due to investors paying more than what the stock is worth in relation to its earnings. COST's trailing-12-month earnings per share (EPS) of 18.78 does not justify its share price in the market. Trailing PE ratios do not factor in the company's projected growth rate, thus, some firms will have high PE ratios caused by high growth recruiting more investors even if the underlying company has produced low earnings so far. COST's 12-month-forward PE to Growth (PEG) ratio of 4.68 is considered a poor value as the market is overvaluing COST in relation to the company's projected earnings growth due. COST's PEG comes from its forward price to earnings ratio being divided by its growth rate. A PEG ratio of 1 represents a perfect correlation between earnings growth and share price. Due to their incorporation of more fundamentals of a company's overall health and focusing on the future rather than the past, PEG ratios are one of the most used valuation metrics by analysts today.

Summary

All together these valuation metrics paint a pretty poor picture for COST at its current price due to a overvalued PEG ratio due to strong growth. The PE and PEG for COST are worse than the average of the market resulting in a valuation score of 15. Click Here to get the full Report on Costco Wholesale Corporation (COST) stock.

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