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Costco Wholesale Corporation (COST) gets a poor rating of 14 out of Investor Watchers Analysis. Our proprietary rating system takes into account the overall health of the company by studying the price, earnings, and growth rate of the stock to determine if it represents good value. At the current price, COST holds a value better than 14% of the shares. Investors looking for long-term growth through buy-and-hold investments will find valuation rank to be particularly relevant when allocating their assets.
Metric analysis
After twelve months, COST has a price-earnings-ratio (PE) of 26.7. The historical average of around 15 shows poor value for COST stock as investors pay higher share prices in relation to the company’s earnings. COST’s high trailing P / E ratio shows that the company has recently traded above its fair market value. The trailing 12-month earnings per share (EPS) of 18.78 does not justify the current price of the share. However, the trailing P / E ratios do not take into account the company’s forecast growth rate, which means that many newer companies have high P / E ratios due to their high growth potential and attract investors despite insufficient profits. COST has a 12 month forward PE-to-growth (PEG) ratio of 4.87. Markets overestimate COST in terms of forecast growth as its PEG ratio is currently above the fair market value of 1. The PEG of 18.7800006 results from the price / earnings ratio divided by its growth rate. PEG ratios are one of the most widely used valuation metrics because they contain more company fundamentals and are more focused on the company’s future than its past.
summary
The valuation metrics of COST are weak at the current price due to an overvalued PEG ratio due to the strong growth. The PER and PEG of COST are below the market average, which leads to a below-average valuation result. For the full report on the Costco Wholesale Corporation (COST) stock click here.
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