Costco Wholesale (COST) investors welcomed last week’s upbeat August sales report, which sparked a multi-day rally ahead of the company’s upcoming fiscal fourth-quarter results, set for September 25th. The strong showing reinforces that Costco’s value proposition continues to resonate with consumers despite a cautious economic backdrop—leaving me cautiously Bullish on the stock in the near term. Moreover, the stock’s weekly technical picture has turned positive, with both moving averages and analyst consensus pointing northwards.
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COST Outperforms Peers
Costco’s stock returned to growth last week, echoing the broader market and outperforming its peers. While COST posted a 2.63% gain, Target (TGT) and BJ’s Wholesale Club (BJ) lost 2.06% and 1.43%, respectively. Interestingly, Walmart (WMT) also rose 2.72%. These results, albeit within the microcosm of one week, likely reflect the valuation proposition offered by companies like Costco and Walmart compared to other retailers, such as Target. Meanwhile, the S&P 500 (SPX) rose 1.53%.
For COST, $1,000 remains a psychological barrier. However, its 200-day moving average is proving to be a significant level of support at around $960. Despite the overall strength of the market, COST’s outperformance was driven by a fundamental development.
Strong August Sales Help De-Risk the Quarter
Its August sales report saw the company grow net sales a robust 8.7% to $21.56 billion. Critically, the release also provided full-year figures, with net sales for the 52-week fiscal period reaching $269.9 billion (up 8.1% year-over-year). The retail giant’s e-commerce efforts continue to pay off, with a 15.6% year-over-year increase.
On a broader basis, Costco is basking in record income growth with Q3 income rising 13% from $1.68 billion or $3.78 to $1.9 billion, or $4.28 per share. Significant boosts in sales and e-commerce are also lending a hand. Net sales for the third quarter were $61.96 billion, an increase of 8% from $57.39 billion in the third quarter last year, while e-commerce comparable sales were up almost 15%.
On the same day, Costco filed a Form 4 with the SEC disclosing that company director John Stanton disposed of 211 shares of common stock, while his son acquired an equivalent amount. Given the modest size of the transactions, these moves likely reflect personal financial planning rather than any change in outlook for Costco’s prospects. Still, viewed more broadly, insider activity at Costco has leaned toward selling in recent months.
New Member Policy Draws Media Spotlight
Meanwhile, Costco recently rolled out an exclusive shopping hour policy for its “Executive Members,” a change that dominated media coverage last week. Some shoppers criticized the move as alienating the broader membership base, though from a business standpoint it reflects Costco’s effort to enhance perks for its most loyal—and highest-paying—customers.
Still, even relatively small changes like this can put the company under the microscope. If the policy proves unpopular, Costco retains the flexibility to reverse course.
The ‘Treasure Hunt’ Model Resonates Online
In today’s internet age, consumer sentiment is easy to track. On social platforms like Reddit’s r/Costco, members eagerly discuss the return of seasonal staples such as pumpkin pies and the availability of big-ticket items like inflatable hot tubs. While these conversations may seem trivial, the steady engagement underscores the viral strength of Costco’s model. Shoppers are drawn to the “treasure hunt” experience, which keeps them coming back.
Valuation Remains the Key Concern
Retail investors don’t share the same enthusiasm for Costco as its shoppers. The debate continues to center on the stock’s premium valuation, with a P/E ratio of ~55—around 2.5x higher than its Consumer Staples peers, as the sector median currently stands at 22x. One analyst recently noted that while Costco remains a favorite destination for shoppers, its stock valuation is considered far too expensive.
Using TipRanks’ Risk Analysis tool, investors can see the most pertinent factors affecting COST stock. As data shows, macro and political factors, COST’s ability to sell, and technological innovation are the three primary risk categories.
What to Watch for in COST’s Quarterly Report
Looking ahead to Costco’s fiscal fourth-quarter 2025 earnings release after market close on Thursday, September 25, consensus calls for EPS of $5.81. Revenue is largely predictable from monthly sales updates, so few surprises are expected on that front. For retailers, costs remain a key focus, as even small shifts can meaningfully affect margins given the “pennies on the dollar” business model.
For Costco, the product mix will be critical—stronger sales of higher-margin categories, such as electronics, versus lower-margin items, like gasoline, would be a positive signal. Above all, membership metrics remain the company’s crown jewel: fees are nearly pure profit and a key measure of loyalty, meaning even a slight dip in renewal rates could raise red flags on Wall Street.
Is COST Stock a Good Buy?
On Wall Street, COST carries a consensus Moderate Buy rating based on 10 Buy, eight Hold, and zero Sell ratings in the past three months. The wholesaler’s average stock price target of $1,086.17 implies an upside potential of almost 13% over the next 12 months.
COST Flagging Pattern Signals Volatility Pre-Earnings
Costco’s stock looks poised for a significant move ahead of its fiscal fourth-quarter results. Technically, COST is “flagging,” a pattern that often precedes a sharp breakout in either direction. While the August sales report helped de-risk near-term expectations, key forward-looking metrics—most notably membership renewal rates—remain undisclosed, leaving room for uncertainty.
One thing seems clear: a simple earnings beat may not be enough to push shares higher. Investors will be focused on margin trends and management’s read on consumer health. In this environment, both bulls and bears may consider hedging with call options as Costco approaches its next big move.