It's been nearly a year since the last time warehouse sales powerhouse Costco (NASDAQ:COST) last missed an earnings target. When the firm reports its fiscal third-quarter 2007 numbers tomorrow, will the streak survive the day?

After the firm's news comes out, we'll have time aplenty to dissect it. But in these few hours before we begin obsessing over Costco's short-term progress, let's take a moment to review what investors think about it as a long-term investment. Our tool in this endeavor: Motley Fool CAPS, where we poll more than 29,000 rated players for their views on well over 4,000 companies, Costco among them. Here's what Fools have to say about the company.

Up or down?
More than 1,000 players have submitted ratings on Costco. Their verdict: Consume, consume.

Of the CAPS investors who have rated Costco, 95% expect the company to outperform the market, and CAPS All-Stars are even more optimistic, at 96% approval. That (currently) suffices to earn the stock four out of five possible stars on CAPS.

Among its CAPS retailer peers, Costco is tied for top o' the heap:

Retail Group

CAPS Rating



Walgreen (NYSE:WAG)


Target (NYSE:TGT)


Whole Foods (NASDAQ:WFMI)


Federated (NYSE:FD)


Wal-Mart (NYSE:WMT)


Family Dollar (NYSE:FDO)


Wall Street vs. Main Street
Among professional Wall Street investors, who presumably know more about such things than do we mere Fools, enthusiasm for Costco is a rarer commodity. Only 71% of the Costco-tracking analysts we track on CAPS give Costco the thumbs-up. Little wonder, given that the stock has lagged the S&P 500 by about 15 percentage points over the past 52 weeks.

Bull pitch
The top-rated bull "pitch" on CAPS disses these dissers, however, reminding investors that "the CEO doesn't give 2 cents about what Wall Street thinks. He knows what needs to be done for the long term and he keeps doing it." Arguing that Costco "has figured out how to beat Walmart in its segment," this investor concludes: "I will have a Buy rating on this stock."

Bear pitch
The bear thesis on Costco should be familiar to any growth investor, and basically argues that the stock is "expensive" or, put another way, the price "got ahead of itself" (with a trailing P/E of 24, but profits growth projected at just 13% going forward, this argument appears to have merit). Foolish bears also dislike the firm's meager 2.6% operating margin, and it's true that this number is inferior to more retail-flavored rivals like Target and Wal-Mart. (That said, Costco's margins thump those at rival BJ's soundly.)

Who said that?
To learn the identities of the wise Fools who penned these thoughts, and explore the plethora of additional financial data we've put together on the company, click here.

And to learn why we like -- and recommended -- Costco at the Fool's flagship stock-picking newsletter, Motley Fool Stock Advisor, just click here to claim a free 30-day trial and read our full write-up.

Fool contributor Rich Smith does not own shares of any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked No. 1,512 out of more than 29,000 raters. Wal-Mart is an Inside Value selection. Whole Foods is a Stock Advisor pick, and Family Dollar is a former recommendation of that newsletter. The Fool has a disclosure policy.