Costco
COST- Our rating
- hold
- 12-month target
- $1,111.31 +9.0%
- Expected vs. S&P 500
- -8.9 ptsSee the math
- Next earnings
- Dec 10In 35 daysEarnings calls page ↗
Costco's boost from its last fee increase is fading, so store sales now have to carry the growth.
Costco runs membership warehouses that sell goods at a small markup and earn their steadiest profit from yearly fees. Fiscal 2026 was strong, with earnings per share up 14%, helped by the 2024 fee increase. That boost has now run its course, so growth has to come from selling more in each warehouse and opening new ones. The stock depends on that, because investors still pay a high price for Costco's earnings.
Costco runs membership warehouses that sell goods at a small markup. Membership fees are only 2% of revenue but about half of operating profit, so the business is built around keeping members renewing.25
What it sells
- Food and sundries39% of revenue, FY2026
Dry groceries, snacks, drinks, cleaning supplies, liquor and tobacco. These everyday purchases keep members coming back.
- Non-food goods26% of revenue, FY2026
Electronics, appliances, clothing, furniture, tires, toys and jewelry. Bigger, less frequent purchases than groceries.
- Gas, pharmacy, services20% of revenue, FY2026
Gas stations, pharmacies, food courts, optical and travel. Gas is 11% of sales and carries thin margins, but it brings members in.
- Fresh food14% of revenue, FY2026
Meat, produce, deli and bakery, which give members a reason to visit often.
- Membership fees2% of revenue, FY2026
$65 a year in the U.S., or more for an Executive membership that pays 2% back. It is about half of operating profit.
Who buys it
84 million paid members, households and small businesses, plus 66 million extra household cards. Executive members make about 75% of purchases, and 92% of U.S. and Canadian members renew. The U.S. and Canada are 86% of sales.
Where you've seen it
The Kirkland Signature label, Costco's own brand, which it sells for less than national brands but at higher margins.
Membership fees are Costco's steadiest profit, so renewals matter. More members now join online, many from a December 2023 campaign that ran weeks before Ron Vachris, president since 2022, became CEO, and management says online members renew less often. The U.S. and Canada renewal rate fell to 92.1% in early 2026. Management says targeted digital reminders have since started lifting it.
How the business makes money
Why Costco's profit comes from fees, not groceries1,2,3,6,7,8,9,21,22
- Step 1
Costco prices goods close to cost, keeping only about 11¢ of each $1 of sales after paying for the goods.
- Step 2
Low prices draw members, who pay a yearly fee, $65 in the U.S., and keep renewing. 42.3 million pay extra for the Executive tier.
- Step 3
Fees are only 2% of revenue but about half of the profit left after running the warehouses, because they cost little to collect.
- Step 4
New and busier warehouses spread fixed costs over more sales. Costco plans about 30 net new warehouses a year.
- What shareholders get
Shareholders get a dividend, but mainly a bet on steady growth. Earnings should rise about 10%, and investors pay about $40 for each $1 of expected yearly earnings.
Advantages
Membership fees pay for low prices
Major advantageCostco's biggest advantage. Fees brought in $5.9B in fiscal 2026, about two-thirds of net income. That lets Costco price goods close to cost and still earn a steady profit.1
What's changing
The fee boost has faded; now growth must come from sales
With the 2024 fee increase fully absorbed, growth now has to come from selling more and opening more warehouses. Costco plans 33 openings in fiscal 2027, five of them relocations. Meanwhile cash has piled up, reaching $20.2B in August. Its last special dividend, $15 a share, was paid in January 2024.1,2,3,12,23
Competitors
Who else an investor would consider, and how they compare.
| Company | Market value | What it does | Compared with Costco Wholesale |
|---|---|---|---|
| Costco Wholesalethis stock | $451.58B | Costco runs membership warehouses that sell goods at a small markup. Membership fees are only 2% of revenue but about half of operating profit, so the business is built around keeping members renewing. | |
| Walmart (Sam's Club)WMT | $954.27B | Walmart's warehouse club, competing on low prices with a cheaper membership. | Both sell bulk to members; Costco's U.S. sales grow faster, 7.2% excluding gas.13,21 |
| BJ's Wholesale ClubBJ | $13.43B | A regional warehouse club in the Eastern U.S., heavy on groceries. | BJ's is regional; Costco is national and global with nearly ten times the members.14 |
| AmazonAMZN | $2.69T | Delivers groceries and household goods same-day, ordered online with Prime. | Amazon wins on convenience; Costco wins on bulk prices, and grew digital sales 20%.15,1 |
Leadership
Who runs the company, and how the stock has done under the CEO.
When Vachris was named (Oct 2023), the stock moved -1.6% that day; the S&P 500 moved -0.9%.
Wall Street on Vachris: PositiveMizuho rates it a Buy after results beat forecasts but cut its price target to $1,065. RBC rates it a Hold, praising pricing and product selection but saying the stock looks expensive and membership growth is slowing.L5,L6
Leadership sources (6) · researched Oct 2026
- L1Costco CEO Craig Jelinek to step down, hand the reins to longtime insider · Associated Press / Anchorage Daily News, 2023-10-19
- L2Costco (COST) Q4 2026 Earnings Call Transcript · The Motley Fool, 2026-09-29
- L3Costco taps former Kroger finance chief to serve as CFO · Grocery Dive, 2024-02-06
- L4Costco Wholesale Corp. Form 8-K (retirement of Russ Miller; appointment of Caton Frates) · Costco / SEC, 2025-08-04
- L5These Analysts Cut Their Forecasts On Costco Following Q4 Results · Benzinga, 2026-09-25
- L6Costco (COST) Stock Climbs as RBC Hails Retailer Despite Neutral Rating · MoneyCheck, 2026-07-13
Bull vs. bear: two bets on the same stock
- 1
A share is a small slice of the company. Its value comes from the profits the company will make in the future.
- 2
Nobody knows those profits yet. Buyers (bulls) pay today's price betting they'll beat what most people expect. Sellers (bears) bet they'll fall short.
- 3
When results come in, the price moves toward whichever side was right, and that side makes money.
Now that the 2024 fee increase has fully flowed through, can Costco still grow earnings per share about 10% a year, to $24.96 in fiscal 2028?1,2,3,6,9,17,20,21
If same-store sales keep growing 6% to 7% and new warehouses open on schedule, earnings grow about 10% a year without another fee increase.
- Shoppers keep spending more. Same-store sales, excluding gas and currency, have grown 6% to 7% for about a year.
- More members are paying for the top tier. Executive members, who pay twice the basic fee, rose 9.4% to a record share of members.
- Costco keeps opening warehouses. It plans about 30 net new ones a year for the next five to ten years.
- Analysts are raising their forecasts. Over the last month, increases to fiscal 2027 estimates outnumbered cuts about two to one.
If sales growth cools as the fee boost fades, earnings growth slips into single digits and investors stop paying 40 times earnings for it.
- Member growth is back to normal. Paid members grew 3.8%, which management called a more typical pace.
- Last quarter's beat was partly one-off. Tariff refunds that end once collected added $0.15 to earnings per share.
- The stock is still expensive. It trades at about 40 times expected earnings, above its range in 2022 and 2023.
Where Delphi landsholdWe think today's price already weighs both sides fairly.See why
What to watch
The numbers that will settle the debate.
- Expected earnings per share
- $4.92
- Expected revenue
- $74.26B
What to listen for: Membership fee growth this quarter, the first with no boost from the 2024 increase, and whether the renewal rate keeps rising from 92.3%.16,17
What would prove this wrong
- ✕Same-store sales excluding gas and currency fall below 5% for two quarters.
- ✕The U.S. and Canada renewal rate drops below 92%.
- ✕Executive member growth slows to low single digits.
- ✕Gross margin falls because price cuts outrun cost savings.
Earnings should grow about 10% and the stock trades below its five-year norm, but the expected 11% return with dividends trails the S&P 500's 18%.
- 12-month target
- $1,111.31 (+9.0%)
- Plus dividend
- +0.6%
- S&P 500, same method, with dividends
- +18.5%
- Expected vs the market
- -8.9 points
The math behind the recommendation
Three 12-month price scenarios, weighted by probability, compared with the S&P 500 under the same method.
Same-store sales stay above 7% excluding gas and Executive upgrades keep fee income growing near 9%, so fiscal 2028 earnings beat forecasts.
$25.52 earnings per share × 51.1 = $1,302.59
Same-store sales grow 6% to 7% and about 30 warehouses open each year, so fiscal 2028 earnings match forecasts.
$25.16 earnings per share × 44.2 = $1,112.38
Sales growth cools toward 5% as the fee boost fades and price cuts squeeze margin, leaving fiscal 2028 earnings short of forecasts.
$24.33 earnings per share × 37.7 = $917.88
Why these odds: Fiscal 2027 estimates rose only from $22.67 to $22.78 over 90 days, with 15 raises and 7 cuts last month. Costco beats estimates by small amounts, and last quarter's beat came partly from tariff refunds.
How the prices are built: Wall Street expects earnings per share of $25.16 for the year starting a year from now (analysts range from $23.49 to $25.87). Today the stock trades at 44.4 times next year's earnings per share; its five-year middle is 43.67.17,18,19,20,1
What tests the call: Fiscal Q1 2027 earnings, the first quarter without the 2024 fee increase boost (Dec 10)
Buy means expected to beat the S&P 500 by 10+ points over 12 months; Sell means expected to trail it by 10+. Inputs gathered Oct 5; the recommendation updates with the price every day. Model-generated, not personalized investment advice. How ratings work · Track record
At $1,019.26, investors pay about 2.4 times what they pay for the average stock's earnings
Costco trades at 44 times the earnings analysts expect over the next 12 months. That ratio is the multiple: what investors pay today for each dollar of a year's earnings. That is above its five-year middle of 44.
Analysts expect earnings to grow about 10% the year after, against about 16% for the S&P 500. The S&P 500 trades at 19 times. To be priced like the average stock, Costco would need to earn about 2.4 times what analysts expect over the next 12 months. The price is a bet on profits well beyond that.
- Costco multiple
- 44×
- S&P 500 multiple
- 19×
- Base case
- +9%
- Bear case
- −10%
Price over the next 12 months' expected earnings.
The same measure for the market.
Our most likely 12-month outcome from $1,019.26.
Bull case +28%.
The skewOur bear case loses about $1.09 for every $1 our base case makes. That ratio, how much you stand to lose against how much you stand to make, is the skew.
Last earnings
No reported quarters available.
Limits of this analysis
Claims that rest on thin or conflicting sources, estimates that had to be extended, and judgment calls.
- ?Costco has not said who approved the December 2023 online campaign; it ran while Craig Jelinek was CEO and Ron Vachris was president, so we attribute it to neither.
- ?The five-year valuation range uses 21 StockAnalysis readings of price over expected earnings since November 2021; a different provider or period would shift the typical level of about 44 times.
- ?Fiscal 2029 earnings consensus is not published, so the one-year-out estimate and its high and low extend fiscal 2028 figures by the implied 9.6% growth.
- ?Management described 6% to 7% same-store sales as the pace of the past year, not as guidance; our earnings growth view assumes it continues.
- ?Comparing $5.9B of fees with $9.2B of net income is our own framing; Costco does not split costs between fees and merchandise, so fees alone do not equal profit.
Sources
Written Oct 5. Numbers link to these sources.
- 1Costco Wholesale Corporation Reports Fourth Quarter and Fiscal Year 2026 Operating Results · Costco Investor Relations, 2026-09-24
- 2Costco (COST) Q4 2026 Earnings Call Transcript · The Motley Fool, 2026-09-29
- 3Earnings call transcript: Costco beats Q4 2026 forecasts, shares edge higher · Investing.com, 2026-09-24
- 4Costco Q4 2026 earnings beat expectations on tariff refund · Yahoo Finance, 2026-09-25
- 5Costco Wholesale (NASDAQ:COST) Stock Price Up 2.9% on Earnings Beat · MarketBeat, 2026-09-25
- 6Costco Supplemental Information, Third Quarter Fiscal 2026 (Form 8-K exhibit) · SEC EDGAR, 2026-05-28
- 7Costco's Q4 member renewal rate slows · Supermarket News, 2025-09-26
- 8Ron Vachris to take Costco CEO reins from Craig Jelinek · Supermarket News, 2023-10
- 9Costco Form 10-K, fiscal 2024 · SEC EDGAR, 2024-10
- 10Costco's Strong Quarter Still Leaves Investors With a Valuation Problem · Yahoo Finance, 2026-05
- 11Why Costco Stock Was Sliding Today · The Motley Fool, 2026-05-29
- 12Even If Costco Doesn't Pay a $10 or $15 Special Dividend in 2027, I'd Still Buy the Stock · The Motley Fool, 2026-10-01
- 13Walmart reports second quarter results (fiscal 2027) · Walmart Investor Relations, 2026-08-20
- 14BJ's Wholesale Club Holdings, Inc. Announces Second Quarter Fiscal 2026 Results · BJ's Investor Relations, 2026-08-21
- 15Amazon's Same-Day perishable grocery delivery expands to 2,300+ cities and towns · Amazon, 2025-12
- 16Costco (COST) Earnings Dates, Call Summary & Reports · TipRanks, 2026-10
- 17Costco Wholesale Corporation (COST) Analyst Ratings, Estimates & Forecasts · Yahoo Finance, 2026-10-05
- 18Costco (COST) Stock Forecast & Price Target · StockAnalysis, 2026-10-05
- 19Costco Wholesale Corporation: Financial Data Forecasts Estimates and Expectations · MarketScreener, 2026-10-05
- 20Costco (COST) Financial Ratios, quarterly · StockAnalysis, 2026-10-05
- 21Costco Supplemental Information, Fourth Quarter Fiscal 2026 (Form 8-K exhibit) · SEC EDGAR, 2026-09-24
- 22Costco (COST) Q3 2026 Earnings Transcript · The Motley Fool, 2026-05-28
- 23Costco Reports First Quarter Fiscal 2024 Operating Results and Announces a Special Cash Dividend (Form 8-K exhibit) · SEC EDGAR, 2023-12-14
- 24Costco Wholesale (COST) daily price history, September 2026 · Yahoo Finance, 2026-10-05
- 25Costco Wholesale Corporation Form 10-K for the fiscal year ended August 30, 2026 · Costco / SEC, 2026-10-07