Costco
COST Mega CapConsumer Defensive · Discount Stores
Updated: May 20, 2026, 22:09 UTC
Key Metrics
Valuation Analysis
About the Company
Costco Wholesale Corporation, together with its subsidiaries, engages in the operation of membership warehouses in the United States, Puerto Rico, Canada, Mexico, Japan, the United Kingdom, Korea, Australia, Taiwan, China, Spain, France, Iceland, New Zealand, and Sweden. It offers merchandise, including sundries, dry groceries, candies, coolers, freezers, deli, liquor, and tobacco; non-food merchandise comprising appliances, small electronics, health and beauty aids, hardware, lawn and garden, sporting goods, tires, toys and seasonal, automotive, stamps, tickets, apparel, furniture, domestics, housewares, special order kiosks, and jewelry; and fresh food, such as meat, produce, service deli, and bakery products. The company is also involved in warehouse ancillary operations, which include
Costco Stock at a Glance
Costco (COST) is currently trading at $1,074.01 with a market capitalization of $476.5B. The trailing P/E ratio stands at 55.76x, with a forward P/E of 47.65x. The 52-week range spans from $844.06 to $1,096.50; the current price is 2.1% below the yearly high. Year-over-year revenue growth stands at +21.5%. The net profit margin stands at 2.99%.
💰 Dividend
Costco pays an annual dividend of $5.88 per share, representing a yield of 0.55%. The payout ratio stands at 27.04%.
📊 Analyst Rating
32 analysts rate Costco (COST) on consensus: Buy. The average price target is $1,072.91, implying -0.1% from the current price. Analyst price targets range from $650.00 to $1,315.00.
Investment Thesis: Strengths & Weaknesses
- Strong revenue growth of 21.5% YoY
- High return on equity (29.65% ROE)
- Analyst consensus: Buy
- Positive free cash flow
- –Low profitability (2.99% margin)
- –High valuation multiple (P/E 55.76x)
- –Currently flagged as overvalued
Technical Snapshot
Price trades above both the 50- and 200-day moving averages, with 50d above 200d — a classic bullish setup (golden-cross alignment).
Risk Profile
The data points to relatively defensive market behavior.
Trading Data
💵 Dividend Info
Related Stocks in the Same Sector
Costco 2026: 138M Members at $999 — the Membership Compounder With a 52× Forward P/E Defended by 92.9% Renewal Rate
The Real Story
Costco closed May 12, 2026 at $999.28 — flirting with the four-digit threshold. The $443B market cap places Costco as the 6th-largest US retailer and the 2nd-most-valuable pure-play retail brand globally (behind Walmart at $1T). The forward P/E of 44.4 is the most expensive of any S&P 500 mega-cap consumer-defensive — and the most defended valuation on the index. The reason: Costco's business is structurally different from any other retailer because of the membership-economics fly-wheel.
Q3/FY2026 (released March 6, 2026) confirmed why the multiple persists. Total revenue: $63.8B (+21.5% YoY, the fastest growth in any large-cap retailer). US comparable sales: +7.4% ex-fuel-and-FX. Membership fees alone: $1.5B in the quarter (+18% YoY) — pure 100%-margin recurring revenue. Total paid memberships hit 138M ($75 Gold-Star + $130 Executive) with a 92.9% renewal rate — the highest in retail history.
The membership-fee hike (September 2024: $60→$65 Gold-Star, $120→$130 Executive) is still flowing through. Each quarter through end-2026, the 'old rate' members convert to the new rate at renewal — meaning membership fee revenue grows mechanically at 12% per year through FY2027 without adding a single new member. That alone is worth approximately $1.50 of EPS by FY2027, representing 6%+ EPS growth simply from the September 2024 price hike.
What Smart Money Thinks
Costco's institutional ownership tilts heavily toward quality-growth active managers. Akre Capital holds 1.4% (their second-largest position after Mastercard), Jensen Investment 0.8%, and Polen Capital 1.1%. The notable buyer in 2026: Pershing Square (Bill Ackman) initiated a 1.2M-share position in Q4/2025, citing 'one of the few businesses where the long-term moat is genuinely uncuttable.' Ackman's prior public-retail bets (Chipotle 2016, McDonald's 2010) have been multi-bagger winners — the read is meaningful.
The notable absence: Berkshire Hathaway. Buffett held a Costco position from 2000 to Q4/2020 (sold completely at ~$370). The post-2020 sale has been wrong by ~170% return — one of Buffett's most-cited 'too early to sell' positions. Munger held Costco personally and on the Costco board until his 2023 passing; his personal estate continued to hold the position. The Munger-vs-Buffett split on Costco was famously public, and Munger's view turned out to be correct.
Insider activity (Form 4): CEO Ron Vachris sold 18,000 shares in February 2026 at $980 (10b5-1 routine). CFO Gary Millerchip sold 8,000 shares. The notable absence: founder Jim Sinegal (retired CEO, 90 years old) has not sold a single share since 2018 — his personal stake is worth $1.2B at current prices. Sinegal's full retention through the 2024–2026 rally is the strongest implicit endorsement available.
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📈 The 3 Real Bull Points
Costco's 92.9% global renewal rate (94.1% US/Canada, 88.4% international) is the highest in retail history. Combined with 138M paid memberships, this generates $5.9B+ in annualized membership-fee revenue at near-100% margin. The recurring nature of membership fees means $5.9B is essentially guaranteed every year regardless of broader consumer environment. This is fundamentally different from traditional retail and is the reason the multiple sustains at 44× while peer retailers trade at 14×.
Q3/FY2026 US comparable sales ex-fuel-and-FX grew 7.4% — the fastest among S&P 500 large-cap retailers. Walmart was 4.6%, Target 1.8%, Kroger 1.2%. The driver: traffic growth +5.8% (vs. industry -0.4%) plus average-ticket +1.5%. Costco continues to gain market share in groceries, electronics, and home goods at a structurally faster rate than competitors. With 870 warehouses globally and 25–30 new openings per year, the unit-growth runway extends through 2035+.
The September 2024 membership fee hike (first since 2017) raised Gold-Star from $60 to $65 and Executive from $120 to $130 — a $5–$10 per member increase. Every quarter through end-FY2026, expiring memberships renew at the new rate. By end-FY2027, all 138M members will be on the new rate, generating an incremental $1.5B+ of pure-margin annualized revenue. That is roughly $1.50/share of EPS or 6%+ EPS growth purely from the price hike already in place.
📉 The 3 Real Bear Points
The forward P/E of 44.4 is at the 95th percentile of Costco's 20-year valuation history. The 20-year median was 26×; the prior peak was 39× (March 2024). Even if Costco's earnings grow 12% annually through 2030 (consensus pathway), the multiple needs to remain at 44× for the stock to return 10%+ annually. Multiple regression to the historical 28× median implies a stock price of $640 — a 36% drawdown that could happen over 18–24 months even with continued earnings growth.
Q3/FY2026's headline +21.5% revenue growth includes the membership-fee-hike anniversary lift, FX tailwinds, and a 53rd-week comparison. The clean underlying organic revenue growth is approximately 8–10% per year — meaningful, but materially below the headline number. As the membership-fee-hike comparison anniversaries in late 2026, the headline growth rate decelerates to 8–9%. The multiple compresses when headline growth slows even if business fundamentals are unchanged.
Costco's international renewal rate of 88.4% is meaningfully below the 94.1% US/Canada rate. New international markets (UK, Australia, Korea, China) have lower membership-retention because of local competitors and different consumer preferences. China expansion (5 warehouses currently, 8 planned) has been slower than expected. International growth is the key to the next decade of Costco — but the rate-of-international-growth is decelerating, which weighs on the long-term thesis.
Valuation in Context
Costco trades at a forward P/E of 44.4, EV/Sales of 1.5, and EV/EBITDA of 28.5 as of May 2026. Comparable peers — Walmart (forward P/E 38.8), Home Depot (forward P/E 25), Target (forward P/E 14) — all trade at meaningful discounts. The only retailer at similar multiples is BJ's Wholesale Club (forward P/E 25, much smaller member base) and Walmart (38.8, getting close as Walmart+ ramps). Costco's premium reflects: 92.9% renewal rate (vs. industry 65%), 138M member base, 7% same-store comp (vs. peer 3%), and 100% margin membership fees. Sum-of-the-parts: core retail at $620/share (16× core EBITDA), membership-fee franchise at $280/share (50× $5.9B at 100% margin, 5% growth), real-estate at $80/share (770 owned warehouses) — total $980/share, essentially current price. Wall Street median price target $1,072 (7% upside), with dispersion from $850 (Bernstein, valuation bear) to $1,250 (Bank of America, membership-economics bull). The 0.6% dividend is irrelevant; this is a growth-and-quality story, not income.
🗓️ Next 3 Catalyst Dates
- September 25, 2026: Q4/FY2026 earnings — full membership-fee-hike anniversary; growth comparison sets the FY2027 narrative
- December 2026: Q1/FY2027 earnings + holiday season — first major test of underlying-organic growth post-hike-comparison
- Ongoing: China expansion pace — each new warehouse opening signals or contradicts the long-term international thesis
💬 Daniel's Take
Costco is the cleanest 'compounder at any price' debate in the S&P 500. The bull case is real: 92.9% renewal rate is genuinely defensible, membership-fee hike is mechanical EPS growth, China expansion is multi-decade optionality. The bear case is also real: 44× forward P/E is historically extreme, and even great businesses give back 30%+ from peak-multiple to fair-multiple over 18–24 months. I do not own Costco at $1,000 because the asymmetry favors patience — buying at $720 (sub-32× forward, 50% drawdown from peak) is a different proposition than buying at $1,000. Munger was right to keep holding through 2023, and his retention from 2000 was the right call. But Sinegal-retention is a 'lifetime hold for a 90-year-old who is fine being wrong' kind of conviction — for a 40-year-old building wealth, the entry price matters more. My add-trigger is below $780 — until then, watching.
Sources (3)
Disclaimer: This article is not investment advice. Investing in stocks carries risks, including total loss.
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