Costco (COST) AI Stock Analysis

• Market Cap: $434.74B
• Dividend Yield: 0.59%
• Average Volume (3M): 1.95M
• Price to Earnings (P/E): 55.5
• Beta (1Y): 0.53
• Revenue Growth: 8.34%
• EPS Growth: 9.58%
• Country: US
• Employees: 333,000
• Sector: Consumer Defensive
• Sector Strength: 42
• Industry: Discount Stores
• EPS (TTM): 4.58
• Shares Outstanding: 443,652,530
• 10 Day Avg. Volume: 1,809,430
• 30 Day Avg. Volume: 1,951,767
• PEG Ratio: 5.23
• Price to Book (P/B): 14.36
• Price to Sales (P/S): 1.52
• P/FCF Ratio: 53.44
• Enterprise Value/Market Cap: 0.97
• Enterprise Value/Revenue: 1.48
• Enterprise Value/Gross Profit: 11.44
• Enterprise Value/Ebitda: 30.09
• 1Y Price Target: $1,088.65
• Price Target Upside: 11.10% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 23
• EPS Forecast (FY): 20.43
• Revenue Forecast (FY): $298.45B

• Rating: 79 Outperform
• Price Target: $1,125.00 ▲(14.81% Upside)
• Action: Reiterated Date: 03/06/26
• Date: Action: Reiterated 03/06/26

The score is driven primarily by strong financial quality (steady growth, robust cash flow, and a notably improved low-leverage balance sheet) and a constructive earnings outlook (digital momentum and planned warehouse expansion). Technicals are supportive but not outright strong in the near term, while valuation is harder to assess due to an unusable P/E input and a low dividend yield.

Positive Factors

Conservative, improving balance sheet

Material debt reduction and a larger equity base provide lasting financial flexibility. Low leverage (~0.27) reduces interest and refinancing risk, supports capital spending and dividends, and strengthens the firm's ability to pursue steady warehouse expansion and withstand cyclical retail shocks.

Strong cash generation and free cash flow

Consistent high operating cash flow and substantial FCF (~61% of net income) underpin capital returns, reinvestment in stores and digital, and ongoing expansion. Persistent cash conversion supports resilience through retail cycles and funds multi-year strategic initiatives without relying on high leverage.

Membership model, digital acceleration, and network expansion

Recurring membership revenue, rapid digital adoption and a disciplined store-growth plan reinforce durable competitive advantages. Strong member metrics and digital sales lift lifetime value, while steady net new warehouses expand market reach and deepen supply-chain efficiency over multiple years.

Negative Factors

Structurally low retail margins

Low absolute margins are inherent to the wholesale/discount model, limiting profit buffers against cost inflation or margin pressure. Even modest increases in freight, labor, or commodity costs can compress earnings substantially, making margin sustainability a persistent, structural exposure.

Moderating growth and uneven free cash flow

Slower top-line acceleration and volatile annual FCF reflect cyclical and working-capital swings. Moderation in member additions or comps would reduce operating leverage benefits, while FCF variability can constrain timing of capex, buybacks or dividends during adverse quarters.

Tariff uncertainty and geopolitical fuel/shipping risk

Uncertain tariff outcomes and potential fuel/shipping disruptions can raise input and logistics costs or delay inventory, pressuring margins and service levels. These externally driven risks are structural over months and can erode price competitiveness or force reinvestment to maintain member value.

Costco Business Overview & Revenue Model

Company Description

Costco Wholesale Corporation, together with its subsidiaries, engages in the operation of membership warehouses in the United States, Puerto Rico, Canada, the United Kingdom, Mexico, Japan, Korea, Australia, Spain, France, Iceland, China, and Taiwan. It offers branded and private-label products in a range of merchandise categories. The company offers sundries, dry groceries, candies, coolers, freezers, liquor, and tobacco and deli products; appliances, electronics, health and beauty aids, hardware, garden and patio products, sporting goods, tires, toys and seasonal products, office supplies, automotive care products, postages, tickets, apparel, small appliances, furniture, domestics, housewares, special order kiosks, and jewelry; and meat, produce, service deli, and bakery products. It also operates pharmacies, opticals, food courts, hearing-aid centers, and tire installation centers, as well as 636 gas stations; and offers business delivery, travel, same-day grocery, and various other services online in various countries. As of August 29, 2021, the company operated 815 membership warehouses, including 564 in the United States and Puerto Rico, 105 in Canada, 39 in Mexico, 30 in Japan, 29 in the United Kingdom, 16 in South Korea, 14 in Taiwan, 12 in Australia, 3 in Spain, 1 in Iceland, 1 in France, and 1 in China. It also operates e-commerce websites in the United States, Canada, the United Kingdom, Mexico, South Korea, Taiwan, Japan, and Australia. The company was formerly known as Costco Companies, Inc. and changed its name to Costco Wholesale Corporation in August 1999. Costco Wholesale Corporation was founded in 1976 and is based in Issaquah, Washington.

How the Company Makes Money

Costco generates revenue primarily through its membership fees and the sale of goods. Members pay an annual fee to access the warehouse clubs, which provides a steady income stream. In addition, the company earns significant revenue from the sale of a wide range of products, including groceries, electronics, and household items, often at lower prices than traditional retailers due to its bulk purchasing and efficient operations. The company also benefits from ancillary revenue streams such as its pharmacy, optical, and travel services. Costco's strong focus on customer satisfaction and low prices fosters member loyalty, leading to a high renewal rate for memberships, which further contributes to its financial success.

Costco Financial Statement Overview

Summary

Strong, steady top-line growth with resilient (though structurally low) retail margins, very high ROE, and robust cash generation. Balance sheet is a key strength with materially lower debt and conservative leverage; main watchouts are moderating growth and uneven year-to-year free cash flow.

Income Statement

TTM (Trailing-Twelve-Months) revenue is $286.3B with solid profitability for a discount retailer (gross margin ~12.9%, EBIT margin ~4.0%, net margin ~3.0%). Revenue has risen consistently across the annual periods shown ($195.9B in 2021 to $275.2B in 2025), and margins have held steady to modestly improved versus earlier years (notably stronger than 2022–2023). Key watchout: growth appears to be moderating versus the stronger 2021–2022 pace, and the business remains structurally low-margin, leaving less cushion if costs rise or pricing tightens.

Balance Sheet

Leverage looks conservative and improving: total debt drops meaningfully in TTM (Trailing-Twelve-Months) to $2.5B from ~$8–10B in prior annual periods, and debt relative to equity remains low (~0.27 TTM). Equity has expanded to $32.1B (from $17.6B in 2021), supporting balance sheet strength. Returns on equity are consistently high (~28–31%), indicating efficient capital use, though this level of return can be harder to sustain if growth slows or margins compress.

Cash Flow

Cash generation is strong: TTM (Trailing-Twelve-Months) operating cash flow is $15.0B and free cash flow is $9.1B, with free cash flow generally trending upward over time despite some volatility (down in 2022 and 2024, stronger in 2023 and 2025, and higher again in TTM). Free cash flow is a healthy share of net income (~61% TTM), supporting financial flexibility. Main weakness: free cash flow growth is uneven year to year, suggesting periodic working-capital or investment swings.

Breakdown	TTM	Aug 2025	Aug 2024	Aug 2023	Aug 2022	Aug 2021
Income Statement
Total Revenue	286.26B	275.24B	254.45B	242.29B	226.95B	195.93B
Gross Profit	37.00B	35.35B	32.09B	29.70B	27.57B	25.25B
EBITDA	14.07B	13.40B	12.15B	10.72B	9.90B	8.63B
Net Income	8.55B	8.10B	7.37B	6.29B	5.84B	5.01B
Balance Sheet
Total Assets	83.64B	77.10B	69.83B	68.99B	64.17B	59.27B
Cash, Cash Equivalents and Short-Term Investments	18.24B	15.28B	11.14B	15.23B	11.05B	12.18B
Total Debt	8.24B	8.17B	8.27B	8.88B	9.04B	10.13B
Total Liabilities	51.55B	47.94B	46.21B	43.94B	43.52B	41.19B
Stockholders Equity	32.09B	29.16B	23.62B	25.06B	20.64B	17.56B
Cash Flow
Free Cash Flow	9.10B	7.84B	6.63B	6.75B	3.50B	5.37B
Operating Cash Flow	15.01B	13.34B	11.34B	11.07B	7.39B	8.96B
Investing Cash Flow	-5.87B	-5.31B	-4.41B	-4.97B	-4.76B	-3.54B
Financing Cash Flow	-4.24B	-3.77B	-10.76B	-2.61B	-3.44B	-6.49B

Costco Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 979.92
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For COST, the sentiment is Neutral. The current price of 979.92 is below the 20-day moving average (MA) of 996.61, above the 50-day MA of 977.49, and above the 200-day MA of 948.07, indicating a neutral trend. The MACD of 5.08 indicates Positive momentum. The RSI at 45.80 is Neutral, neither overbought nor oversold. The STOCH value of 60.81 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for COST.

Costco Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
COST	79 Outperform	$434.74B	55.55	28.81%	0.59%	8.34%	9.58%
WMT	73 Outperform	$972.47B	43.44	23.69%	0.85%	4.34%	17.27%
BJ	68 Neutral	$12.23B	20.97	27.41%	―	2.82%	3.77%
TGT	63 Neutral	$52.10B	8.81	26.06%	4.79%	-2.16%	-12.66%
Sector *	62 Neutral	$20.33B	14.63	-3.31%	3.23%	1.93%	-12.26%
DG	57 Neutral	$27.88B	20.87	18.66%	1.88%	4.86%	-4.51%
DLTR	51 Neutral	$21.21B	11.44	34.83%	―	-39.27%	-182.36%

Costco Corporate Events

Costco Shareholders Back Board, Approve Dividend Payout

At its January 15, 2026 Annual Meeting of Shareholders, Costco Wholesale Corporation reported strong shareholder support for its board nominees, the ratification of KPMG LLP as its independent auditor for fiscal 2026, and an advisory approval of executive compensation for fiscal 2025, while a shareholder proposal calling for a greenwashing risk audit was rejected. On the same date, the board declared a quarterly cash dividend of $1.30 per share, payable on February 13, 2026 to shareholders of record as of January 30, 2026, underscoring Costco’s ongoing capital return to investors and signaling continued confidence in its financial position and cash-generation capabilities.

The most recent analyst rating on (COST) stock is a Buy with a $1146.00 price target. To see the full list of analyst forecasts on Costco stock, see the COST Stock Forecast page.