Shares of Costco Wholesale (NASDAQ: COST) are a perennial favorite for good reason. The warehouse retailer is practically recession-proof, and it has delivered elevated revenue growth since the beginning of the pandemic -- more than two years already. Its stock has gained about 90% since that time.

But at its current price, Costco stock trades at 42 times trailing 12-month earnings. The price-to-earnings (P/E) ratio is one metric that helps investors determine how accurately a stock is valued. Is the current price a lot to pay for this specific stock? Or is it inexpensive relative to what it offers?

All stocks at the same price are not equal. If a stock with a four-digit price tag is posting high growth, or delivers a lot of income, it could be a much better value and be considered "cheaper" than a stock with a two-digit price tag. Alternatively, a stock with a low price might be "expensive" when measured against its growth opportunities.

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Source Fool.com