The Zacks Analyst Blog Highlights Costco Wholesale, Ross Stores, Dollar General, and Target

For Immediate ReleaseChicago, IL – May 7, 2025 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Costco Wholesale Corp. COST, Ross Stores, Inc. ROST, Dollar General Corp. DG and Target Corp. TGT.Here are highlights from Tuesday’s Analyst Blog:Costco Continues Trading at a Premium: Should You Refrain from Buying the Stock?Costco Wholesale Corp., a prominent player in the membership-based retail sector, is currently trading at a forward 12-month price-to-earnings (P/E) multiple of 52.96X, which positions it at a premium compared to the industry's average of 32.41X and the S&P 500's 20.97. The stock is also trading above its median P/E level of 50, observed over the past year. The valuation does suggest that Costco is overvalued.Has Costco's Stellar Price Run Already Capped Its Upside?Despite the elevated valuation, investors have shown strong confidence in Costco. The stock has risen 11.9% over the past month, outperforming the industry. However, such a steep surge in the stock price may be limiting the near-term upside. With much of the optimism already priced in, it becomes increasingly difficult to justify fresh entry at these levels without a meaningful pullback or further acceleration in growth.Costco has outperformed its peers, such as Ross Stores, Inc., Dollar General Corp. and Target Corp.. Shares of Ross Stores and Dollar General have risen 10.6% and 8%, respectively, while Target has declined 0.4% in the past month.Costco's Fundamentals Remain Robust — Yet Fully ValuedCostco's resilient, membership-based business model remains a key engine of growth, underpinned by exceptionally high renewal rates and operational efficiency. In the second quarter of fiscal 2025, renewal rates stayed robust — 93% in the United States and Canada and 90.5% globally — reflecting strong customer loyalty. This, combined with Costco's bulk purchasing power and efficient supply chain, enables the company to maintain competitive pricing and withstand economic pressures better than many peers.Membership trends continue to support Costco's momentum. The company ended the second quarter of fiscal 2025 with 78.4 million paid household members, marking a 6.8% increase year over year. Executive memberships, a more profitable category for Costco, grew by 9.1% to reach 36.9 million, accounting for 47.1% of all paid members and driving 73.8% of global sales. Membership fee income climbed 7.4%, aided by a recent fee hike, which added approximately 3% growth in the quarter.Costco's digital transformation also continues to gain traction. E-commerce comparable sales grew 20.9%, or 22.2% adjusted for foreign exchange, in the second quarter. This reflects Costco's successful digital transformation strategy, as it improves online product assortment and fulfillment efficiencies. As more shoppers embrace omnichannel retail, Costco's digital strength is playing an increasing role in driving traffic and overall sales performance.On the brick-and-mortar front, expansion efforts remain on track. While only one new warehouse was opened during the second quarter, the company plans to accelerate its pace, targeting 28 new locations — including 25 new warehouses and three relocations — by the end of fiscal 2025.Competitive Landscape: Can Costco Stay Ahead?Costco's impressive sales figures are part of a larger retail picture where competition is intensifying. Rivals like Ross Stores, Dollar General and Target are investing in expanding their capabilities and enhancing customer experience.Moreover, margins remain a critical area to monitor, with potential concerns stemming from any deleverage in the selling, general and administrative rate. Additionally, foreign exchange volatility and tariffs on key imports create uncertainty. Meanwhile, consumer spending is shifting toward essentials, with discretionary spending seeing weaker demand.How Consensus Estimates Stack Up for CostcoOver the past seven days, the Zacks Consensus Estimate for the current fiscal year has risen by a penny to $17.96. However, for the next fiscal year, the Zacks Consensus Estimate has decreased by a couple of cents to $19.73. These estimates indicate expected year-over-year growth rates of 11.5% and 9.9%, respectively.COST: A Quality Stock, but a Hold for NowCostco's strong fundamentals, including a growing membership base, solid e-commerce sales and strategic investments, continue to support its market leadership. While the stock's premium valuation warrants caution, its resilient business model offers a compelling case for long-term investors. The prudent move for investors may be to hold existing positions rather than chase the stock at its current highs. Waiting for a better entry point could offer a more favorable risk-reward balance. Costco currently has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.Why Haven't You Looked at Zacks' Top Stocks?Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.Today you can access their live picks without cost or obligation.See Stocks Free >>Media ContactZacks Investment Research800-767-3771 ext. 9339support@zacks.com                                      https://www.zacks.com                                                   Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>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 Target Corporation (TGT): Free Stock Analysis Report Dollar General Corporation (DG): Free Stock Analysis Report Costco Wholesale Corporation (COST): Free Stock Analysis Report Ross Stores, Inc. (ROST): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks