Costco Continues Steady Growth Amid Economic Uncertainty
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Mar 11 2026
0mins
Should l Buy COST?
Source: NASDAQ.COM
- Strong Earnings Performance: Costco's revenue for Q2 of fiscal 2026 reached nearly $70 billion, reflecting a 9.2% year-over-year increase, demonstrating the company's ability to maintain growth amid economic uncertainty and bolstering investor confidence.
- Profitability Improvement: The company reported over $2 billion in net income for the quarter, a 14% increase, indicating that revenue growth has outpaced rising costs and expenses, providing a solid foundation for future investments.
- Market Expansion Potential: With 634 of its 924 warehouses located in the U.S., many mid-sized metros still lack a Costco, and large metros are missing Costco Business Centers, which serve restaurants and small businesses, presenting significant growth opportunities ahead.
- Valuation Challenges: Despite Costco's strong growth momentum, its 54 P/E ratio poses challenges for short-term stock price increases, potentially leading investors to seek lower-valued retail stocks, which may impact its stock trajectory.
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Analyst Views on COST
Wall Street analysts forecast COST stock price to rise
24 Analyst Rating
19 Buy
4 Hold
1 Sell
Strong Buy
Current: 996.580
Low
769.00
Averages
1061
High
1205
Current: 996.580
Low
769.00
Averages
1061
High
1205
About COST
Costco Wholesale Corporation (Costco) operates membership warehouses and e-commerce sites that offer a selection of nationally branded and private-label products in a wide range of categories. The Company buys the majority of its merchandise directly from suppliers and route it to cross-docking consolidation points (depots) or directly to its warehouses. It operates 891 warehouses, including 614 in the United States and Puerto Rico, 108 in Canada, 40 in Mexico, 35 in Japan, 29 in the United Kingdom, 19 in Korea, 15 in Australia, 14 in Taiwan, seven in China, five in Spain, two in France, and one each in Iceland, New Zealand and Sweden. It also operates e-commerce sites in the United States, Canada, the United Kingdom, Mexico, Korea, Taiwan, Japan and Australia. The Company provides wide selection of merchandise, plus the convenience of specialty departments and exclusive member services.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Costco's Steady Growth Faces Stock Valuation Risks
- Significant Membership Growth: Costco's paid membership surged from 44.6 million to 82.1 million, indicating enhanced customer loyalty and market appeal, which lays a solid foundation for future revenue growth.
- Continued Warehouse Expansion: The global warehouse count increased from 686 to 924, demonstrating strong international expansion capabilities, although the future target of only 28 new warehouses may limit growth potential.
- Stock Price Discrepancy: Despite a cumulative earnings per share growth of 258% since fiscal 2015, the stock's total return reached 734%, reflecting a high premium on earnings that may face valuation risks in the future.
- Cautious Future Growth Expectations: Analysts forecast a 12% earnings growth this year and an annual growth of 9.6% thereafter, suggesting that investors should temper their expectations for the next decade, anticipating more modest returns compared to previous years.
See More
Costco to Launch Stand-Alone Gas Stations to Alleviate Congestion
- Stand-Alone Gas Station Initiative: Costco plans to launch its first stand-alone gas station in Mission Viejo, California, in June with 40 pumps, aimed at alleviating congestion around its current store locations and enhancing customer experience.
- Exclusive Member Benefits: The new gas stations will be accessible only to members who pay an annual fee of $65 or $130, likely attracting more consumers seeking gas prices that are $0.10 to $0.30 below the U.S. average, thereby increasing membership and company revenue.
- Strategic Value Enhancement: As of the end of fiscal year 2025, Costco operated 747 gas stations worldwide, contributing 10% to the company's net revenue, and the introduction of new stations will further solidify its pricing authority and competitive edge in the market.
- Positive Market Reaction: Costco's stock has risen 15% this year, and although it trades at 48 times forward earnings, the strategy of stand-alone gas stations is viewed positively by shareholders, boosting investor confidence amid geopolitical tensions and recession concerns.
See More
Costco's Ten-Year Investment Returns Remarkable
- Remarkable Investment Returns: Investing $1,000 in Costco ten years ago would yield approximately $7,600 today, significantly outperforming the S&P 500's $3,700, highlighting Costco's strong performance amid steady growth.
- Strong Membership Growth: The number of Costco's global warehouses increased from 686 to 924, while paid memberships surged from 44.6 million to 82.1 million, indicating substantial progress in expanding market share and customer base.
- Profitability Improvement: Since fiscal 2015, Costco's earnings per share have cumulatively risen by 258%, averaging about 13% annually, although the stock's total return of 734% is primarily due to investors paying a higher premium for its earnings.
- Future Growth Challenges: With management targeting only 28 net new warehouses by fiscal 2026 and e-commerce growth not yet significantly impacting performance, analysts project 12% earnings growth this year and 9.6% annually thereafter, prompting investors to temper expectations for the next decade.
See More
Celsius Shares Rise 4.5% After Upgrade by Deutsche Bank
- Rating Upgrade Impact: Deutsche Bank upgraded Celsius from Hold to Buy, citing a recent 33% stock decline as an overreaction to new competition, with Costco expected to account for only 10% of 2025 sales, thereby boosting market confidence in the stock.
- Price Target Adjustment: Despite the upgrade, Deutsche Bank lowered its price target from $56 to $44, reflecting a cautious stance on market competition, while TD Cowen reiterated a Buy rating, viewing the recent pullback as excessive.
- Market Volatility: Celsius shares have experienced 25 moves greater than 5% over the past year, and today's rise indicates that the market considers this news significant, though it does not fundamentally alter perceptions of the business, highlighting investor caution.
- Long-term Investment Returns: Although Celsius is down 25.5% year-to-date, investors who bought $1,000 worth of shares five years ago would now see their investment worth $2,220, demonstrating potential long-term gains despite short-term challenges.
See More
Semiconductor Market Approaching Bottom
- Market Sentiment Analysis: The current market sentiment is heavily bearish, with investors adopting a cautious outlook; however, historical trends indicate that market lows often precede improvements in sentiment and fundamentals, suggesting potential rebound opportunities.
- Semiconductor ETF Performance: The VanEck Semiconductor ETF (SMH) has shown a standard A-B-C corrective pattern since its February highs, currently trading in the $360 to $370 range, which may act as a support zone, indicating that selling pressure could be nearing exhaustion.
- Relative Strength Indicator: The ratio chart of SMH to the S&P 500 indicates a more tempered performance of the semiconductor sector relative to the broader market, with a triangle consolidation pattern that typically suggests a potential upward breakout, further supporting a long-term bullish outlook.
- Nvidia Valuation Analysis: Nvidia (NVDA) is currently trading at a forward P/E ratio of 20.5 times, with expected earnings of $8.29 per share in 2027, highlighting its growth potential significantly surpassing the market average; investors face a choice between paying 46 times earnings for a slow-growing company or approximately 20 times for a company with nearly 70% growth.
See More
Costco Profits from Rising Gas Prices
- Sales Growth Momentum: Since the launch of Operation Epic Fury on February 28, Costco's (COST) stock has risen by 1%, outperforming the S&P 500's 8.2% decline, reflecting investor confidence in its sales growth amid surging gas prices.
- California Market Impact: Approximately 26% of Costco's sales come from California, where gas prices have soared to an average of $6 per gallon, the highest in the nation, driving consumers to fill up at Costco and shop for groceries, thereby boosting overall sales.
- Future Sales Expectations: Analysts project a strong 10% sales growth for Costco in March, with even stronger results anticipated in the coming months, indicating that consumers' increased pursuit of value will further enhance performance.
- Historical Context Analysis: In spring 2022, the Ukraine conflict led to a 43% increase in retail gas prices, and despite consumer pressure, Costco's operating momentum improved, highlighting the significance of its price leadership in the market.
See More
Costco's Steady Growth Faces Stock Valuation Risks
- Significant Membership Growth: Costco's paid membership surged from 44.6 million to 82.1 million, indicating enhanced customer loyalty and market appeal, which lays a solid foundation for future revenue growth.
- Continued Warehouse Expansion: The global warehouse count increased from 686 to 924, demonstrating strong international expansion capabilities, although the future target of only 28 new warehouses may limit growth potential.
- Stock Price Discrepancy: Despite a cumulative earnings per share growth of 258% since fiscal 2015, the stock's total return reached 734%, reflecting a high premium on earnings that may face valuation risks in the future.
- Cautious Future Growth Expectations: Analysts forecast a 12% earnings growth this year and an annual growth of 9.6% thereafter, suggesting that investors should temper their expectations for the next decade, anticipating more modest returns compared to previous years.
See More
Costco to Launch Stand-Alone Gas Stations to Alleviate Congestion
- Stand-Alone Gas Station Initiative: Costco plans to launch its first stand-alone gas station in Mission Viejo, California, in June with 40 pumps, aimed at alleviating congestion around its current store locations and enhancing customer experience.
- Exclusive Member Benefits: The new gas stations will be accessible only to members who pay an annual fee of $65 or $130, likely attracting more consumers seeking gas prices that are $0.10 to $0.30 below the U.S. average, thereby increasing membership and company revenue.
- Strategic Value Enhancement: As of the end of fiscal year 2025, Costco operated 747 gas stations worldwide, contributing 10% to the company's net revenue, and the introduction of new stations will further solidify its pricing authority and competitive edge in the market.
- Positive Market Reaction: Costco's stock has risen 15% this year, and although it trades at 48 times forward earnings, the strategy of stand-alone gas stations is viewed positively by shareholders, boosting investor confidence amid geopolitical tensions and recession concerns.
See More
Costco's Ten-Year Investment Returns Remarkable
- Remarkable Investment Returns: Investing $1,000 in Costco ten years ago would yield approximately $7,600 today, significantly outperforming the S&P 500's $3,700, highlighting Costco's strong performance amid steady growth.
- Strong Membership Growth: The number of Costco's global warehouses increased from 686 to 924, while paid memberships surged from 44.6 million to 82.1 million, indicating substantial progress in expanding market share and customer base.
- Profitability Improvement: Since fiscal 2015, Costco's earnings per share have cumulatively risen by 258%, averaging about 13% annually, although the stock's total return of 734% is primarily due to investors paying a higher premium for its earnings.
- Future Growth Challenges: With management targeting only 28 net new warehouses by fiscal 2026 and e-commerce growth not yet significantly impacting performance, analysts project 12% earnings growth this year and 9.6% annually thereafter, prompting investors to temper expectations for the next decade.
See More
Celsius Shares Rise 4.5% After Upgrade by Deutsche Bank
- Rating Upgrade Impact: Deutsche Bank upgraded Celsius from Hold to Buy, citing a recent 33% stock decline as an overreaction to new competition, with Costco expected to account for only 10% of 2025 sales, thereby boosting market confidence in the stock.
- Price Target Adjustment: Despite the upgrade, Deutsche Bank lowered its price target from $56 to $44, reflecting a cautious stance on market competition, while TD Cowen reiterated a Buy rating, viewing the recent pullback as excessive.
- Market Volatility: Celsius shares have experienced 25 moves greater than 5% over the past year, and today's rise indicates that the market considers this news significant, though it does not fundamentally alter perceptions of the business, highlighting investor caution.
- Long-term Investment Returns: Although Celsius is down 25.5% year-to-date, investors who bought $1,000 worth of shares five years ago would now see their investment worth $2,220, demonstrating potential long-term gains despite short-term challenges.
See More
Semiconductor Market Approaching Bottom
- Market Sentiment Analysis: The current market sentiment is heavily bearish, with investors adopting a cautious outlook; however, historical trends indicate that market lows often precede improvements in sentiment and fundamentals, suggesting potential rebound opportunities.
- Semiconductor ETF Performance: The VanEck Semiconductor ETF (SMH) has shown a standard A-B-C corrective pattern since its February highs, currently trading in the $360 to $370 range, which may act as a support zone, indicating that selling pressure could be nearing exhaustion.
- Relative Strength Indicator: The ratio chart of SMH to the S&P 500 indicates a more tempered performance of the semiconductor sector relative to the broader market, with a triangle consolidation pattern that typically suggests a potential upward breakout, further supporting a long-term bullish outlook.
- Nvidia Valuation Analysis: Nvidia (NVDA) is currently trading at a forward P/E ratio of 20.5 times, with expected earnings of $8.29 per share in 2027, highlighting its growth potential significantly surpassing the market average; investors face a choice between paying 46 times earnings for a slow-growing company or approximately 20 times for a company with nearly 70% growth.
See More
Costco Profits from Rising Gas Prices
- Sales Growth Momentum: Since the launch of Operation Epic Fury on February 28, Costco's (COST) stock has risen by 1%, outperforming the S&P 500's 8.2% decline, reflecting investor confidence in its sales growth amid surging gas prices.
- California Market Impact: Approximately 26% of Costco's sales come from California, where gas prices have soared to an average of $6 per gallon, the highest in the nation, driving consumers to fill up at Costco and shop for groceries, thereby boosting overall sales.
- Future Sales Expectations: Analysts project a strong 10% sales growth for Costco in March, with even stronger results anticipated in the coming months, indicating that consumers' increased pursuit of value will further enhance performance.
- Historical Context Analysis: In spring 2022, the Ukraine conflict led to a 43% increase in retail gas prices, and despite consumer pressure, Costco's operating momentum improved, highlighting the significance of its price leadership in the market.
See More
