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Costco Is Behind Schedule When It Comes to 1 Important Thing: Here's What It Means for Investors

TheMotleyFool

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Costco Is Behind Schedule When It Comes to 1 Important Thing: Here's What It Means for Investors: https://g.foolcdn.com/editorial/images/779229/cost.jpg

Warehouse-style retail chain Costco Wholesale (NASDAQ: COST) is a stock that investors are willing to pay up for right now. Any stock's valuation -- how expensive or cheap it is -- can be measured relative to the size of its business. And Costco's is objectively high.

One way to value a stock is by the profits from the business. This is called the price-to-earnings (P/E) ratio. Among the hundreds of companies in the S&P 500, the average P/E is about 25, according to YCharts. However, the P/E valuation for Costco is double this at 51. This is Costco's highest valuation since the 1990s.