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Costco
(NASDAQ:COST)
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Rating:72Outperform
Price Target:
$1,052.00
▲(5.21% Upside)
Action:Reiterated
Date:07/09/26
The score is driven primarily by strong underlying financial quality (steady growth, excellent balance sheet strength, and robust cash generation) and a supportive earnings update highlighting resilient demand, digital acceleration, and strong membership health. Offsetting these positives are a stretched valuation (high P/E and low yield) and currently weak-to-neutral technical momentum with the stock trading below key short- and medium-term moving averages.
Positive Factors
Balance sheet strength
Costco's very low leverage and materially expanded equity base provide durable financial flexibility. With debt-to-equity down to ~0.07 TTM and high ROE, the company can fund organic expansion, absorb cyclical shocks, and prioritize capital allocation (warehouses, capex, dividends) without stressing solvency.
Negative Factors
Gross margin pressure
Strategic price investments and mix shifts into lower-margin categories (gas, e-commerce, pharmacy) are compressing core margins. Persistent margin pressure would reduce operating leverage and limit the pace of margin recovery, making profit growth more reliant on volume and tight SG&A control.
Read all positive and negative factors
Positive Factors
Negative Factors
Balance sheet strength
Costco's very low leverage and materially expanded equity base provide durable financial flexibility. With debt-to-equity down to ~0.07 TTM and high ROE, the company can fund organic expansion, absorb cyclical shocks, and prioritize capital allocation (warehouses, capex, dividends) without stressing solvency.
Read all positive factors
Costco Key Performance Indicators (KPIs)
Any
Memberships
Measures the number and composition of paid members (including Executive tier), reflecting the core recurring revenue base, customer loyalty, and the potential to drive store and ancillary sales per household.
Measures the number and composition of paid members (including Executive tier), reflecting the core recurring revenue base, customer loyalty, and the potential to drive store and ancillary sales per household.
Data provided by:
The Fly
The FlyCostco (COST) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$404.88B
Dividend Yield0.59%
Average Volume (3M)2.66M
Price to Earnings (P/E)46.0
Beta (1Y)0.38
Revenue Growth9.23%
EPS Growth12.69%
CountryUS
Employees333,000
SectorConsumer Defensive
Sector Strength42
IndustryDiscount Stores
Share Statistics
EPS (TTM)19.91
Shares Outstanding443,478,800
10 Day Avg. Volume2,970,627
30 Day Avg. Volume2,663,482
Financial Highlights & Ratios
PEG Ratio5.23
Price to Book (P/B)14.36
Price to Sales (P/S)1.52
P/FCF Ratio53.44
Enterprise Value/Market Cap1.03
Enterprise Value/Revenue1.42
Enterprise Value/Gross Profit11.04
Enterprise Value/Ebitda28.85
Forecast
1Y Price Target
$1,100.62Price Target Upside10.07% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering22
EPS Forecast (FY)20.53
Revenue Forecast (FY)$301.88B
Costco Business Overview & Revenue Model
Company Description
Costco Wholesale Corporation, alongside its group entities, operates membership-based retail warehouses across a broad international scope, spanning the United States, Puerto Rico, Canada, the United Kingdom, Mexico, Japan, South Korea, Australia,...
How the Company Makes Money
Costco primarily makes money through two major sources: (1) membership fees and (2) merchandise and service sales. Membership fees are a core part of Costco’s economic model: customers pay annual fees (generally via different membership tiers) for...
Costco Earnings Call Summary
Earnings Call Date:May 28, 2026
(Q3-2026)
| % Change Since: |
Next Earnings Date:Sep 24, 2026
Earnings Call Sentiment Positive
The call highlighted strong top‑line growth (net sales +11.6%, comps +9.8%), robust digital momentum (digital comps +21.5%, site/app traffic +37%), record gas volumes and solid membership metrics (membership income +10.7%, executive memberships +9.6%), supported by continued investment in warehouses, digital and same‑day delivery. Headwinds included gross margin pressure driven by mix and strategic price investments, near‑term inflation risks (notably gas and resin‑driven nonfood inflation), moderated membership growth rate (4.1%) and some one‑time SG&A offsets (healthcare, legal). Many of the negative items were framed as strategic or cyclical (e.g., temporary margin investments to drive traffic, lapping LIFO charges) and management emphasized strong demand, stability in supply chain, and long‑term growth initiatives (real estate pipeline, retail media, AI). Overall, the positives on sales, digital acceleration, membership health and record volumes materially outweigh the transitory and managed challenges discussed on the call.Positive Updates
Net Income and EPS Growth
Net income of $2.19 billion in Q3 (12 weeks ended May 10), up 15% year-over-year; diluted EPS $4.93 vs $4.28 last year (up 15%).
Negative Updates
Gross Margin Pressure and Mix Impact
Reported gross margin rate fell 21 basis points to 11.04%; core margin down 46 basis points (29 bps lower excluding gas inflation); core‑on‑core margins declined 9 basis points due to investments in lower everyday prices (e.g., eggs, beef) and mix shift into lower‑margin categories (gas, e‑commerce, pharmacy).
Read all updates
Q3-2026 Updates
Positive
Negative
Net Income and EPS Growth
Net income of $2.19 billion in Q3 (12 weeks ended May 10), up 15% year-over-year; diluted EPS $4.93 vs $4.28 last year (up 15%).
Read all positive updates
Company Guidance
Costco emphasized it does not provide formal forward guidance but disclosed several forward-looking targets and metrics: Q3 results were net income $2.19B ($4.93/share) on net sales of $69.2B (+11.6%), comparable sales +9.8% (6.6% ex gas & FX), digitally‑enabled comps +21.5%, traffic +2.4% and average transaction +7.3% (4.2% ex gas/FX); membership stats of 82.9M paid members (+4.1%), 41.2M paid executive members (+9.6%), U.S./Canada renewal rate 92.2% (up 10 bps) and worldwide 89.7%; operational and capital expectations include Q3 CapEx $1.41B and FY CapEx ~ $6.5B, 4 net new warehouses opened this quarter (928 worldwide) with ~26 net new openings expected this fiscal year and a long‑term target of 30+ openings/year, same‑day delivery avg <45 minutes with member satisfaction 4.8/5, ancillary comps up mid‑20s and gas comps positive high‑20s, LIFO charge $44M (vs $130M LY) and gross margin 11.04% (‑21 bps), SG&A 8.96% (‑20 bps), and plans to submit Section 301 tariff refund claims (refunds expected to roll in over ~2–3 months) while continuing to evaluate returning proceeds to members; May sales for the 4 weeks ending May 31 will be released June 3 after market close.Costco Financial Statement Overview
Summary
Income Statement
84
Very Positive
Balance Sheet
92
Very Positive
Cash Flow
78
Positive
| Breakdown | TTM | Aug 2025 | Aug 2024 | Aug 2023 | Aug 2022 | Aug 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 293.59B | 275.24B | 254.45B | 242.29B | 226.95B | 195.93B |
| Gross Profit | 37.80B | 35.35B | 32.09B | 29.70B | 27.57B | 25.25B |
| EBITDA | 14.47B | 13.40B | 12.15B | 10.72B | 9.90B | 8.63B |
| Net Income | 8.84B | 8.10B | 7.37B | 6.29B | 5.84B | 5.01B |
Balance Sheet | ||||||
| Total Assets | 86.43B | 77.10B | 69.83B | 68.99B | 64.17B | 59.27B |
| Cash, Cash Equivalents and Short-Term Investments | 20.00B | 15.28B | 11.14B | 15.23B | 11.05B | 12.18B |
| Total Debt | 8.23B | 8.17B | 8.27B | 8.88B | 9.04B | 10.13B |
| Total Liabilities | 52.92B | 47.94B | 46.21B | 43.94B | 43.52B | 41.19B |
| Stockholders Equity | 33.51B | 29.16B | 23.62B | 25.06B | 20.64B | 17.56B |
Cash Flow | ||||||
| Free Cash Flow | 8.81B | 7.84B | 6.63B | 6.75B | 3.50B | 5.37B |
| Operating Cash Flow | 15.00B | 13.34B | 11.34B | 11.07B | 7.39B | 8.96B |
| Investing Cash Flow | -6.13B | -5.31B | -4.41B | -4.97B | -4.76B | -3.54B |
| Financing Cash Flow | -3.77B | -3.77B | -10.76B | -2.61B | -3.44B | -6.49B |
Costco Technical Analysis
Negative
999.89
Price Trends
985.44
Negative
990.15
Negative
955.03
Negative
Market Momentum
-15.32
Positive
36.13
Neutral
29.67
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For COST, the sentiment is Negative. The current price of 999.89 is above the 20-day moving average (MA) of 952.23, above the 50-day MA of 985.44, and above the 200-day MA of 955.03, indicating a bearish trend. The MACD of -15.32 indicates Positive momentum. The RSI at 36.13 is Neutral, neither overbought nor oversold. The STOCH value of 29.67 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for COST.
Costco Risk Analysis
Costco disclosed 26 risk factors in its most recent earnings report. Costco reported the most risks in the "Macro & Political" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Costco Peers Comparison
UnderperformOutperform
Sector (62)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $60.08B | 17.65 | 21.74% | 4.79% | 0.47% | -16.65% | |
73 Outperform | $23.24B | 19.44 | 35.90% | ― | -19.68% | ― | |
72 Outperform | $404.88B | 46.00 | 28.27% | 0.59% | 9.23% | 12.69% | |
67 Neutral | $892.98B | 39.99 | 24.26% | 0.85% | 5.87% | 21.68% | |
62 Neutral | $20.33B | 14.63 | -3.31% | 3.23% | 1.93% | -12.26% | |
62 Neutral | $25.53B | 16.66 | 18.65% | 1.88% | 4.72% | 35.43% | |
61 Neutral | $10.93B | 20.02 | 26.59% | ― | 5.92% | 0.80% |
* Consumer Defensive Sector Average
COST
Costco
916.25
-48.65
-5.04%
DG
Dollar General
118.92
8.03
7.24%
DLTR
Dollar Tree
124.91
15.55
14.22%
TGT
Target
135.14
35.27
35.32%
WMT
Walmart
113.90
20.28
21.66%
BJ
Bj's Wholesale Club Holdings
88.05
-18.46
-17.33%
Costco Corporate Events
Business Operations and StrategyDividendsFinancial Disclosures
Costco Reports Strong June Sales and Dividend Declaration
Positive
Jul 8, 2026
In July 2026, Costco reported robust sales momentum, with net sales of $29.24 billion for the five-week retail month of June ended July 5, 2026, up 10.6% from a year earlier. Net sales for the first 44 weeks of its fiscal year reached $250.43 bill...
Business Operations and StrategyDividends
Costco Increases Quarterly Dividend, Highlighting Shareholder Focus
Positive
Apr 15, 2026
Costco Wholesale Corporation announced on April 15, 2026, that its board approved a higher quarterly cash dividend on its common stock, raising the payout from $1.30 to $1.47 per share, or $5.88 on an annualized basis. The dividend is payable on M...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.