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What do the Fundamentals Predict for Costco Wholesale Corporation (COST) Stock?

Friday, December 01, 2023 03:43 PM | InvestorsObserver Analysts

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What do the Fundamentals Predict for Costco Wholesale Corporation (COST) Stock?

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 41.37. The historical average of roughly 15 shows a poor value for COST stock as investors are paying higher share prices relative to the company's earnings. COST's high trailing PE ratio shows that the firm has been trading above its fair market value recently. Its trailing 12-month earnings per share (EPS) of 14.16 does not justify the stock's current price. However, trailing PE ratios do not factor in the company's projected growth rate, resulting in many newer firms having high PE ratios due to high growth potential enticing investors despite inadequate earnings.
COST currently has a 12-month-forward-PE-to-Growth (PEG) ratio of 4.42. The market is currently overvaluing COST in relation to its projected growth due to the PEG ratio being above the fair market value of 1. COST's PEG comes from its forward price to earnings ratio being divided by its growth rate. Because PEG ratios include more fundamentals of a company's overall health with additional focus on the future, they are one of the most used valuation metrics by analysts.

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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