Costco Wholesale Corporation (COST) Hit a 52 Week High, Can the Run Continue?

Core Viewpoint - Costco's shares have increased by 12.5% over the past month, reaching a new 52-week high of $1043.09, and have gained 13.8% year-to-date, outperforming the Zacks Retail-Wholesale sector and the Zacks Retail - Discount Stores industry [1]. Performance Drivers - The stock has consistently exceeded earnings expectations, not missing the consensus estimate in the last four quarters. In the latest earnings report on December 12, 2024, Costco reported EPS of$ 3.82, surpassing the consensus estimate of $3.79, and beat the revenue estimate by 0.17% [2]. Earnings Projections - For the current fiscal year, Costco is projected to achieve earnings of$ 18.01 per share on revenues of $272.79 billion, reflecting an 11.79% increase in EPS and a 7.21% increase in revenues. For the next fiscal year, earnings are expected to rise to$ 19.66 per share on $291.08 billion in revenues, indicating year-over-year changes of 9.18% and 6.7%, respectively [3]. Valuation Metrics - Costco's current valuation shows a Price-to-Earnings (P/E) ratio of 57.9X for the current fiscal year, significantly higher than the peer industry average of 19.9X. The trailing cash flow basis shows a ratio of 49.2X compared to the peer group's average of 17.3X, and the PEG ratio stands at 6.22, indicating that the stock may not be in the top tier from a value perspective [7]. Zacks Rank - Costco holds a Zacks Rank of 2 (Buy) due to rising earnings estimates. The company meets the criteria for selection, as it has a Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, suggesting potential for further share price appreciation in the near term [8].