Key Takeaways
- Costco's profit margin saw an 8% increase vs Walmart's profit margin hitting 7.1% throughout 2024
- Trump's tariffs may have a major impact on both retail giants, especially Costco, due to their reliance on imported
- Both US-based retail giants have historically stable financial revenue growth and fundamentals
Introduction
Two of America's largest retail giants, Costco vs Walmart. How, as an investor, are you able to decide between the two to add, or allocate more of, your hard-earned investment toward? I myself am in a constant tossup between the two, but this article will lay it all out and provide you with more clarity.
Costco Vs Walmart
| Costco | Walmart | |
| Revenue (Annual 2024) | $250 Billion | $673.81 Billion |
| Market Cap | $411.66 Billion | $737.46 Trillion |
| P/E Ratio | 54.46 | 37.74 |
| 52 Week Range | $658 - $1,008 | $52 - $96 |
| Headquarters | Washington, USA | Arkansas, USA |
Differences Between Costco Vs Walmart
Costco
Industry: Retail
Ticker: COST
Costco is a large retail giant in the US, they specialize in offering their 'members' high-quality merchandise, most famously in bulk. With over 890 warehouses worldwide, it's no wonder Costco has grown into the billions valuation it is today.
Costco places a special emphasis on its membership program, which brings the company roughly $4.8 billion annually. In total, throughout 2024 Costco's profit margin was $32.1 billion, 8% higher compared to 2023, with an operating profit of $9.29 billion. Leaning toward strong financials.
Walmart
Industry: Retail
Ticker: WMT
Walmart is another retail conglomerate that shares similarities to Costco. However, Walmart's business model is solely on retail shoppers purchasing several goods, whereas Costco's model of selling in bulk.
Throughout 2024, Walmart's profit margin hit $157.98 billion, a 7.1% increase compared to 2023, with an operating profit of $27.01 billion. Walmart's revenue has resulted in consecutively paying YoY growing dividends.
What does the future look like for Costco Vs Walmart?
Consumer spending is steadily increasing, and both companies are well positioned to retain their existing customers with very little competition breaking into their respective markets.
With Costco expanding into new locations and Walmart planning on building several new stores, both companies are set to see steady growth throughout 2025 and over the next several years.
Potential threats
Costco
As the company sources the majority of its merchandise from overseas, most notably China, Vietnam, Italy, etc... Costco will need to navigate the potentially harmful tariffs the Trump administration is set to impose, leading to a potentially tough year for the company.
Costco will need to find a way to reduce the number of non-members using members' cards to buy their merchandise. Without closely monitoring this, Costco may position itself to begin seeing declining revenue from its membership arm.
Walmart
Walmart's produce is mostly American-grown and domestically sourced. This is a strong position for Walmart to safely navigate. However, they may also face challenges with the new Trump tariffs and it may indirectly impact their bottom line due to their American suppliers.
Should I buy Costco or Walmart Stock?
We can see both companies offer unique products to their customer, both of which have strong fundamentals. However, with the US going through uncertain trade policies Costco may get a harder hit than Walmart, due to their reliance on internationally imported goods.
Between the two companies, it seems Walmart may be the safer option during uncertain times. But no one can make accurate forecasts, so it's recommended you do your own due diligence before investing.
Conclusion
As you can see, it may be a hard choice to decide between Costco or Walmart stock, as both have a long history of stable financials and a consistently growing user base. Each retail giant has uncertain challenges ahead that will reflect in their stock price throughout 2025.
