Costco Wholesale Corporation (COST)
Fair ValueFundamental
68
Price
$910.34
Market Cap
$397.57B
Part 1 · What the company is worth
Overview
Costco runs warehouse stores that sell groceries, household goods and big-ticket items like electronics and tires in bulk, at prices kept close to cost, to customers who pay an annual membership fee to shop there. It carries a deliberately narrow selection — a few thousand items instead of a typical supermarket's tens of thousands — buying each one in huge volume to negotiate the lowest possible price from suppliers, then passing most of the savings straight to the customer.
How it makes money
Costco makes money two ways that work together: thin margins on merchandise that keep prices low enough to justify the membership, and the membership fee itself, which is nearly pure profit and funds a large share of the company's earnings. Because the merchandise business is priced to be barely profitable, member renewal — running near 90% — matters more to Costco's economics than any single item's markup, which is why keeping members satisfied enough to renew each year is the business's central discipline.
Revenue by segment
Packaged groceries, snacks, beverages and household consumables sold in bulk — the largest single merchandise category by revenue.
Electronics, appliances, tires, apparel and other big-ticket, non-grocery merchandise sold in bulk at deep-discount pricing to members.
Gas stations, pharmacies, optical centers, food courts and travel booking — services attached to warehouses that draw repeat member visits.
Meat, produce, bakery and deli items, which require faster inventory turnover than Costco's packaged-goods categories.
Annual membership dues, charged separately from merchandise and priced almost entirely as profit given Costco's thin retail margins.
Competitive moat
Cost advantage · WideCostco's huge purchase volumes let it negotiate lower unit costs than almost any retail competitor, and it passes most of that saving on rather than keeping it as margin, which keeps members coming back and buying in bulk, reinforcing the volume that won the discount in the first place. That cycle is difficult for a smaller or higher-margin retailer to break into.
What drives demand
DefensiveMost of what Costco sells is groceries and household staples that people keep buying regardless of the economy, and the membership fee is typically one of the last subscriptions a household cancels. Demand does soften somewhat for the big-ticket, discretionary items in the Non-Foods category during a downturn, but the core grocery business has historically held up well through recessions.
Key risks
- Thin merchandise margins leave little room for error — Merchandise is priced to be barely profitable on its own, so a cost increase Costco cannot pass through to members, or a slip in member renewal, has an outsized effect on earnings.
- Competition from e-commerce and discount retailers — Amazon, Walmart's Sam's Club and other discounters compete for the same bulk-buying customer, and online shopping has reduced the advantage of a physical warehouse trip for some categories.
- Reliance on continued membership renewal and growth — The business model depends on members renewing each year and on adding new members and warehouses; a meaningful drop in the renewal rate would remove a large share of profit.
- Labor cost and supply chain pressure — Rising wages, tariffs and supply-chain disruption raise the cost of goods and store operations at a company that has limited ability to raise member-facing prices without hurting the value proposition.
The case for
Buyers argue that Costco's cost advantage and near-90% membership renewal give it one of retail's most durable and repeatable business models, that the membership fee provides a stable, high-margin profit base largely insulated from merchandise price swings, and that the format keeps winning new members even as e-commerce reshapes the rest of retail.
The case against
Sellers fear that a business built on razor-thin merchandise margins has little cushion if costs rise faster than Costco can pass them on, that e-commerce and discount rivals are chipping away at the reasons to make a physical warehouse trip, and that the stock's premium valuation already assumes membership growth and renewal rates stay near their historic highs indefinitely.
Written by the editors, published on August 18, 2026
Direct competitors
Who this company fights with for the same customers
Generated on September 18, 2026 with claude-haiku-4-5 — shared with all users
Walmart owns Sam's Club, the second-largest US warehouse club, which sells the same bulk groceries, fuel and general merchandise to the same paying members, and its supercenters compete for the same weekly family shop.
BJ's runs the third US membership warehouse club chain, charging an annual fee for bulk groceries and fuel in the same East Coast markets where Costco operates.
PriceSmart operates the same paid-membership warehouse club format in Central America, the Caribbean and Colombia, overlapping with Costco's push into Latin American markets.
Amazon sells household goods and groceries to the same subscribing households through Prime and Whole Foods, competing directly with Costco's membership model and its e-commerce arm.
Target competes for the same middle- and upper-income US shopper across groceries, apparel and home goods, and Costco names it among its US competitors.
Kroger is the largest US traditional supermarket chain and competes for the same grocery basket and fuel purchases, with private labels set against Costco's Kirkland Signature.
Balance Sheet & Liquidity
Revenue
$293.59B
Trailing 12 months (through 5/10/2026)
Net Income
$8.84B
Trailing 12 months (through 5/10/2026)
Free Cash Flow
$7.84B
Total Equity
$29.16B
Total Liabilities
$47.94B
Current Ratio
1.07
Interest Coverage
76.88
Debt/EBITDA
0.64
Earnings Per Share
Revenue & Net Income
Free Cash Flow
Income Breakdown
Historical statement
Margins over time
Debt over time
How heavy the debt is
Growth grid
Growth — Revenue
Fair Value Estimation
Fair Value
$774.53
Current Price
$910.34
Margin of Safety
-17.5%
Fair Value Range
$510.06 - $1039.00
Spread across the valuation methods used, not a statistically calibrated confidence interval.
Estimation Methods
Valuation Metrics
P/E Ratio
45.79
ROE
27.8%
P/B Ratio
12.05
P/FCF
45.85
Gross Margin
12.9%
ROIC
20.0%
Profitability Radar
Value Creation (Economic Moat)
ROIC
20.0%
WACC
9.1%
ROIC − WACC
+10.9 pp
ROIC exceeds the cost of capital — the company is creating value for shareholders.
Fundamental Analysis Criteria
Passed (18)
- EPS shows upward trend
- EPS CAGR 13.30%
- Price CAGR 18.91%
- ROIC 20.0%
- Debt/Equity ratio
- Positive Free Cash Flow
- Current Ratio
- Interest Coverage
- Debt/EBITDA
- Return on Tangible Assets
- Low reliance on intangibles
- ROE 28.3%
- Revenue Growth 5Y 10.5%
- Analyst Consensus 65% Buy
- Earnings Quality (OCF/NI) 1.70
- Share Dilution -0.0%
- Net Margin Trend 3.0% vs 2.9%
- Piotroski F-Score 7/9
Failed (9)
- Gross Margin 12.9%
- P/FCF 45.85
- P/B Ratio 12.05
- Operating Margin 3.8%
- CapEx intensity
- Price below Graham Number
- DCF valuation (Overvalued)
- Earnings Surprise avg -0.3%
- PEG Ratio 3.02
Unavailable (1)
- Dividend Payout NaN%
Piotroski F-Score
Strong financial health
Earnings Quality
High quality: earnings backed by cash
Share Dilution
Buying back shares. Shareholder friendly
Institutional Holdings
Governance
Executive Team
| Name | Title | Age |
|---|---|---|
| Mr. Ron M. Vachris | President, CEO & Director | 60 |
| Mr. Gary Millerchip | Executive VP & CFO | 53 |
| Mr. Javier Polit | Executive VP and CI&DO of Information Systems | 60 |
| Mr. Pierre Riel | Executive VP & COO of International Division | 61 |
| Ms. Tiffany M. Barbre | Senior VP, Corporate Controller & Principal Accounting Officer | 51 |
| Ms. Claudine E. Adamo | Executive Vice President of Administration | 54 |
| Mr. John Sullivan | Executive VP, General Counsel & Corporate Secretary | 64 |
| Sheri Flies | Senior Vice President of Global Sustainability & Compliance | - |
| Peter Gruening | Senior VP of Membership, Marketing & Member Service Centers | - |
| Brenda Weber | Senior Vice President of Human Resources | - |
Audit Risk
6
Board Risk
2
Compensation Risk
4
Shareholder Rights Risk
1
Part 2 · The price and when to enter
This part won't tell you whether the company is worth owning: it helps you choose when to buy it, once the fundamentals have convinced you. Inside: technical analysis, potential, historical drawdowns, gamma exposure.
Documents
- View document
Annual Report (10-K)
A yearly overview of the business, its financial results, and the risks it faces.
Filed on 2025-10-08
- View document
Quarterly Report (10-Q)
A snapshot of financial performance for the most recent three-month period.
Filed on 2026-06-03
- View document
Current Report (8-K)
An announcement of a major event, such as a leadership change or big news.
Filed on 2026-09-24
via SEC EDGAR
Income History
via SEC EDGAR
Latest News
Recent headlines for COST, sourced from Markets Gazette.
- 6d agoPOSITIVEAzioni Costco: perché potrebbe presto arrivare un dividendo straordinario
Costco Wholesale reported fourth-quarter financial results that surpassed market expectations, leading to a positive stock movement. Beyond the strong quarterly figures, an in-depth balance sheet analysis indicates the potential for a special dividend payout. Despite a recent decline of over 15% from its yearly high, this moderate performance may present an attractive entry point for long-term investors following the Q4 report. The anticipation of an extraordinary dividend, coupled with solid earnings, suggests a favorable outlook for shareholders focused on income and capital appreciation.
- 7d agoPOSITIVECostco’s results beat expectations. Here’s why investors are still cautious.
Costco reported fourth-quarter earnings that surpassed analyst expectations, largely due to significant tariff refunds. While the profit beat is a positive indicator for the retail giant, investors remain cautious. The company's ability to manage costs and maintain membership growth in a competitive environment will be key factors to watch. The positive earnings, however, suggest underlying operational strength that could support the stock price, especially if the company can sustain this performance without relying on one-off benefits.
- 6/5/2026POSITIVEIf You Invested $100 In Costco Wholesale Stock 10 Years Ago, You Would Have This Much Today
An investment of $100 in Costco Wholesale Corporation stock a decade ago would have yielded a substantial return, illustrating the company's consistent growth and market performance. While specific figures are not provided in the snippet, the implication of significant appreciation suggests strong revenue growth, expanding membership base, and effective cost management. This historical performance underscores Costco's resilience and its appeal to long-term investors seeking steady capital appreciation and potential dividend income.
- 5/29/2026POSITIVECostco's Gas Stations Set All-Time Records As Drivers Hunt For Lower Prices
Costco reported Q3 earnings that surpassed analyst expectations, driven by a remarkable 9.8% comparable sales growth. The company's gas stations achieved all-time record sales as consumers actively sought lower fuel prices, highlighting Costco's value proposition during economic uncertainty. This performance underscores Costco's resilience and ability to attract price-sensitive shoppers, suggesting continued strength in its membership model and overall sales trajectory. Investors may view this as a positive indicator of sustained consumer demand for Costco's offerings.
- 5/28/2026POSITIVECostco gas demand hits records, as shoppers try to stay ahead of future price spikes
Costco reported a robust 9.8% increase in same-store sales for its third quarter, significantly surpassing Wall Street's expectations. This strong performance was notably boosted by a surge in gasoline sales, indicating record demand as consumers anticipate future price increases. The company's ability to leverage high-demand, essential goods like gasoline, alongside its core membership model, suggests resilience and potential for continued growth. Investors may view this as a positive sign of Costco's operational strength and its capacity to attract and retain customers even in fluctuating economic conditions.
- 5/28/2026NEUTRALFull Transcript: Costco Wholesale Q3 2026 Earnings Call
Costco Wholesale Corporation is scheduled to hold its Q3 2026 Earnings Call on May 28, 2026, at 10:00 PM ET. The transcript of this call will provide detailed insights into the company's financial performance, operational highlights, and future outlook. Investors and analysts will be scrutinizing key metrics such as revenue growth, same-store sales, membership renewal rates, and profit margins. The call is expected to offer guidance on the company's strategic initiatives and its positioning within the competitive retail landscape, influencing investor sentiment and potential stock price movements.
via Markets Gazette