Strong July same store sales growth will help stabilize Costco Wholesale Corp.'s (COST) when the company reports those results tomorrow, however Guggenheim's John Heinbockel is worried that it could cause the stock to be overvalued.
"Bottom line, we think broad-based comp strength, across geographies and product categories, should raise investor confidence in the brand, business model, and lengthy growth runway," Heinbockel said. "That said, we remain Neutral-rated in the belief that the current valuation-11.4x calendar 2018E EBITDA-is still elevated and that consensus 2018 expectations may be too optimistic."
Costco shares were up slightly on Tuesday.
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