Costco (COST) AI Stock Analysis

Compare

21,165 Followers

Top Page

Costco

(NASDAQ:COST)

Rating:78Outperform

Price Target:―

Costco's strong financial performance and positive earnings call highlight its growth potential, supported by strategic expansions and robust membership growth. However, its high valuation and potential tariff-related challenges temper the outlook.

Positive Factors

E-commerce Growth

E-commerce sales for Costco saw a significant year-over-year increase of 11.6%.

Global Sales Performance

Trends abroad were better, with both Canada and Other International regions accelerating and coming in ahead of consensus estimates.

Membership Growth

Costco's membership fee income growth and membership stats remain solid, positioning the company well to manage the tariff backdrop and likely to accelerate share gains.

Negative Factors

Sales Performance

May sales came in a touch below expectations and modestly eased sequentially, although they remained very healthy.

Same-Store Sales

Costco's same-store sales showed a sequential decline, with performance lower than the average in previous months.

Traffic Trends

Store traffic growth slowed to 3.4% globally, a decrease from the average growth of 5.2% seen in previous months.

Costco (COST) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$442.05B

Dividend Yield0.52%

Average Volume (3M)1.99M

Price to Earnings (P/E)56.5

Beta (1Y)0.66

Revenue Growth5.94%

EPS Growth9.31%

CountryUS

Employees333,000

SectorConsumer Cyclical

Sector Strength57

IndustryDiscount Stores

Share Statistics

EPS (TTM)4.28

Shares Outstanding443,477,080

10 Day Avg. Volume2,455,510

30 Day Avg. Volume1,985,185

Financial Highlights & Ratios

PEG Ratio2.16

Price to Book (P/B)8.50

Price to Sales (P/S)0.00

P/FCF Ratio38.60

Enterprise Value/Market Cap0.29

Enterprise Value/Revenue0.12

Enterprise Value/Gross Profit3.56

Enterprise Value/Ebitda2.71

Forecast

1Y Price Target

$1,107.68

Price Target Upside11.86% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering23

Costco Business Overview & Revenue Model

Company DescriptionCostco Wholesale Corporation (COST) is a leading global retailer operating membership-only warehouse clubs. Founded in 1983 and headquartered in Issaquah, Washington, Costco offers a wide range of merchandise, including groceries, electronics, apparel, and home goods. The company operates in various sectors, providing high-quality products at competitive prices to its members through its vast network of warehouses across multiple countries.

How the Company Makes MoneyCostco makes money primarily through the sale of goods and services in its retail warehouses and online platform. The company's revenue model is built on offering products in bulk at low prices, which is made possible by efficient supply chain management and high inventory turnover. A significant portion of Costco's revenue comes from membership fees, which provide a steady and predictable income stream. These fees are crucial as they drive customer loyalty and help offset operational costs, enabling the company to maintain its competitive pricing strategy. Additionally, Costco has strategic partnerships with manufacturers and suppliers, allowing for exclusive product offerings and improved margins. The company's earnings are further supported by ancillary businesses, including gas stations, optical centers, pharmacies, and food courts within its warehouses.

Costco Key Performance Indicators (KPIs)

Any

Memberships

Memberships
Tracks the number of active memberships, highlighting customer loyalty and the potential for recurring revenue through membership fees.

Chart InsightsCostco's membership growth has been robust, with a steady increase over the past five years, reflecting strong customer loyalty and value perception. The latest earnings call highlights a 7.4% rise in membership fee income, underscoring the strategic importance of memberships to Costco's revenue model. With a 93% renewal rate in the US and Canada, and executive memberships contributing significantly to sales, Costco's expansion plans, including 28 new warehouses, are likely to further bolster membership growth despite challenges like foreign exchange and tariff uncertainties.

Data provided by:

Main Street Data

Costco Earnings Call Summary

Earnings Call Date:May 30, 2025

(Q3-2025)

% Change Since: -4.80%|

Next Earnings Date:Sep 25, 2025

Earnings Call Sentiment Positive

Costco exhibited strong overall performance with significant membership and e-commerce growth, as well as successful expansion of its warehouse network. However, challenges related to tariffs, LIFO charges, and renewal rate fluctuations present headwinds.

Q3-2025 Updates

Positive Updates

Warehouse Expansion

Opened nine new warehouses in Q3, including locations in Melbourne, Australia, and Japan. Plans to open 10 more in Q4, ending the year with 914 warehouses worldwide.

Record Membership Growth

Membership fee income grew by 10.4% year over year, reaching $1.24 billion. Total paid household members increased by 6.8% to 79.6 million.

Strong E-commerce Performance

E-commerce comp sales were up 14.8%, or 15.7% adjusted for FX, driven by investments in technology and personalized member experiences.

Kirkland Signature Growth

Sales of Kirkland Signature items outpaced overall sales growth, with KS sales penetration up approximately 50 basis points year over year.

Gasoline Sales Milestone

Achieved two of the all-time highest gallon weeks in the U.S. due to expanded gas station hours and lower prices.

Negative Updates

Impact of Tariffs and LIFO Charges

Incurred a $130 million LIFO charge in Q3 due to non-food inflation and tariffs. Additional $40-$50 million LIFO charge expected in Q4.

Challenges with Renewal Rates

U.S. and Canada renewal rate decreased due to a Groupon promotion and higher penetration of online sign-ups, which renew at a slightly lower rate.

SG&A Increase

SG&A increased by 20 basis points year over year, largely due to investment in employee wages and new warehouse openings.

Company Guidance

In the third quarter of fiscal 2025, Costco Wholesale Corporation reported significant expansion and financial performance metrics. The company opened nine new warehouses, including a relocation in Melbourne, Australia, and plans to open ten more in the next quarter, aiming for a total of 914 worldwide by the end of the fiscal year. Net income rose to $1.9 billion, or $4.28 per diluted share, reflecting a 13% increase from $1.68 billion, or $3.78 per share, in the same quarter last year, despite a $130 million LIFO charge and $40 million in additional employee vacation accruals. Net sales grew by 8% to $61.96 billion, with U.S. comparable sales up 6.6% (7.9% excluding gas deflation), and e-commerce sales increased by 14.8% (15.7% adjusted for FX). Membership fee income rose by 10.4% to $1.24 billion, with renewal rates at 92.7% in the U.S. and Canada. Gross margin improved by 41 basis points to 11.25%, driven by the fresh departments and lower commodity costs. Capital expenditures for the quarter were approximately $1.13 billion, with a full-year estimate of over $5 billion. The company also launched a buy now, pay later program with Affirm to enhance customer purchasing power for big-ticket items.

Costco Financial Statement Overview

Summary

Costco's financial health is robust, with strong revenue growth and improved margins. The balance sheet is solid with a low debt-to-equity ratio, and cash flow is strong with increased free cash flow and a high operating cash flow to net income ratio.

Income Statement

Very Positive

Costco has demonstrated strong revenue growth over the years, with a significant increase from $166.76B in 2020 to $268.78B in TTM 2025. Gross profit margin has remained stable, currently at 13.38% in TTM 2025, indicating operational efficiency. The net profit margin has shown a steady upward trend, reaching 2.92% in TTM 2025, reflecting improved profitability. EBIT and EBITDA margins have also improved, indicating effective cost management.

Balance Sheet

Very Positive

Costco maintains a healthy balance sheet with a strong equity position; the equity ratio is 35.94% in TTM 2025. The company has managed its debt well, maintaining a low debt-to-equity ratio of 0.30, which suggests financial stability. Return on equity is robust at 28.91% in TTM 2025, indicating effective use of equity to generate profit.

Cash Flow

Very Positive

Costco's cash flow from operations has shown consistent growth, and free cash flow has improved significantly, with a 10.4% increase from 2024 to TTM 2025. The operating cash flow to net income ratio of 1.58 in TTM 2025 indicates strong cash generation relative to net income, supporting operational sustainability.

TTM	Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Breakdown
Income Statement		Total Revenue
268.78B	254.45B	242.29B	226.95B	195.93B	166.76B
	Gross Profit
35.97B	32.09B	29.70B	27.57B	25.25B	21.82B
	EBIT
10.08B	9.29B	8.11B	7.79B	6.71B	5.43B
	EBITDA
11.58B	12.15B	11.14B	10.28B	8.92B	7.37B
	Net Income Common Stockholders
7.84B	7.37B	6.29B	5.84B	5.01B	4.00B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
14.85B	11.14B	15.23B	11.05B	12.18B	13.30B
	Total Assets
75.48B	69.83B	68.99B	64.17B	59.27B	55.56B
	Total Debt
8.18B	8.27B	8.88B	9.04B	10.13B	10.17B
	Net Debt
-5.66B	-1.63B	-4.82B	-1.16B	-1.13B	-2.11B
	Total Liabilities
48.36B	46.21B	43.94B	43.52B	41.19B	36.85B
	Stockholders Equity
27.13B	23.62B	25.06B	20.64B	17.56B	18.28B
Cash Flow		Free Cash Flow
7.32B	6.63B	6.75B	3.50B	5.37B	6.05B
	Operating Cash Flow
12.43B	11.34B	11.07B	7.39B	8.96B	8.86B
	Investing Cash Flow
-5.05B	-4.41B	-4.97B	-3.92B	-3.54B	-3.89B
	Financing Cash Flow
-4.00B	-10.76B	-2.61B	-3.44B	-6.49B	-1.15B

Costco Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price990.21

Price Trends

50DMA

996.73

Negative

100DMA

991.31

Negative

200DMA

955.02

Positive

Market Momentum

MACD

0.13

Positive

RSI

42.31

Neutral

STOCH

6.42

Positive

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 990.21 is below the 20-day moving average (MA) of 1021.09, below the 50-day MA of 996.73, and above the 200-day MA of 955.02, indicating a neutral trend. The MACD of 0.13 indicates Positive momentum. The RSI at 42.31 is Neutral, neither overbought nor oversold. The STOCH value of 6.42 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
COST	78 Outperform	$442.05B	56.54	32.08%	0.52%	5.94%	9.31%
WMT	78 Outperform	$764.52B	41.10	22.80%	0.98%	4.22%	-0.17%
BJ	77 Outperform	$14.36B	25.50	32.76%	―	2.84%	11.25%
DG	77 Outperform	$24.53B	21.26	15.69%	2.11%	4.77%	-23.73%
TGT	66 Neutral	$44.58B	10.78	29.08%	4.51%	-0.69%	2.03%
Sector *	62 Neutral	$6.90B	11.05	2.80%	4.27%	2.67%	-24.92%
DLTR	58 Neutral	$20.05B	―	19.25%	―	-20.46%	-202.26%

* Consumer Cyclical Sector Average

Performance Comparison

COST

Costco

990.21

137.83

16.17%

Dollar General

111.68

-11.70

-9.48%

DLTR

Dollar Tree

95.19

-10.84

-10.22%

TGT

Target

95.37

-40.95

-30.04%

WMT

Walmart

94.44

28.10

42.36%

Bj's Wholesale Club Holdings

110.62

23.83

27.46%

Costco Corporate Events

Executive/Board Changes

Costco Announces Leadership Change in Accounting Roles

Neutral

Jun 11, 2025

Costco announced that Dan Hines will retire as Senior Vice President, Corporate Controller, and Principal Accounting Officer on June 30, 2025, after 35 years of service. Tiffany Barbre will succeed him in these roles effective July 1, 2025, bringing her extensive experience within the company since 2005. Her appointment is expected to ensure continuity in Costco’s financial leadership, with her compensation package reflecting her new responsibilities.

The most recent analyst rating on (COST) stock is a Buy with a $975.00 price target. To see the full list of analyst forecasts on Costco stock, see the COST Stock Forecast page.

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.