A Growth Stock with Strong Prospects
Growth investors are always on the lookout for companies with above-average financial growth, as these stocks tend to attract market attention and deliver solid returns. However, finding a great growth stock can be challenging.
Earnings growth is a crucial factor for growth investors, and Costco delivers on this front. The company's historical EPS growth rate is 17%, and its projected EPS growth for this year is 9.1%, significantly exceeding the industry average of 8.2%. This strong earnings growth indicates strong prospects for the company and potential for future stock price gains.
Growth investors often overlook the asset utilization ratio, but it's an important indicator of a company's efficiency in generating sales from its assets. Costco boasts an impressive S/TA ratio of 3.61, meaning it generates $3.61 in sales for every dollar in assets. This is significantly higher than the industry average of 1.45, demonstrating Costco's superior efficiency in utilizing its assets.
In addition to efficient asset utilization, Costco also exhibits strong sales growth. The company's sales are expected to grow 4.4% this year, exceeding the industry average of 3.9%. This consistent sales growth further strengthens Costco's position as a top growth stock.
Further validating Costco's growth potential is the positive trend in earnings estimate revisions. The Zacks Consensus Estimate for the current year has increased by 0.2% over the past month, indicating growing analyst confidence in the company's future performance.
With its strong earnings growth, efficient asset utilization, robust sales growth, and positive earnings estimate revisions, Costco stands out as a compelling growth stock with the potential to outperform the market. Its Growth Score of A and Zacks Rank #2 further solidify its position as a top pick for growth investors seeking solid returns.