Costco Continues Steady Growth Amid Economic Uncertainty
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Mar 11 2026
0mins
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: 954.270
Low
769.00
Averages
1061
High
1205
Current: 954.270
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 Sales and Profit Growth Continues
- Sales Performance: For the third quarter of fiscal 2026, Costco reported net sales of $69.2 billion, solidifying its position as the world's third-largest retailer, demonstrating strong competitive strength and consumer preference.
- Investment Returns: Over the past decade, Costco's stock has generated a total return of 661%, meaning a $10,000 investment made ten years ago would now be worth $76,110, significantly outperforming the S&P 500's 328% return, highlighting its exceptional investment performance.
- Expansion Strategy: Costco continues to open new warehouses both domestically and internationally while growing its membership base and occasionally raising annual fees, resulting in consistent revenue and profit growth despite fluctuations in the macroeconomic environment.
- Valuation Caution: With a current price-to-earnings ratio of 48.9, nearly double that of the S&P 500, investors should exercise caution when considering purchasing Costco shares, particularly given the high valuation at this time.
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Vanguard Consumer Staples ETF Outperforms S&P 500
- Historical Returns: Since its inception in 1957, the S&P 500 has generated an average annual return of approximately 10%, leading Vanguard's founder John Bogle to recommend that investors simply buy index funds to simplify their investment strategy.
- Vanguard Consumer Staples ETF Performance: The Vanguard Consumer Staples ETF (VDC) outperformed the S&P 500 during the Great Recession and throughout 2022, primarily due to its focus on companies that provide non-discretionary goods, which tend to maintain stable sales during economic downturns.
- Portfolio Composition: VDC passively tracks the MSCI US IMI Consumer Staples 25/50 index, comprising 104 consumer staples stocks, with major holdings in large-cap companies like Walmart (16.2%), Costco (12.3%), and Procter & Gamble (9.1%), which dominate its portfolio.
- Long-Term Investment Comparison: While VDC serves as a strong defensive play during bear markets, its price has only risen 20% over the past decade compared to VOO's 80% increase, and with an expense ratio of 0.09% versus VOO's 0.03%, VDC may not be the best choice for long-term investors.
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Analysis of VDC ETF Performance in Bear Markets
- Defensive Investment Advantage: The Vanguard Consumer Staples ETF (VDC) outperformed the S&P 500 from 2007 to 2009 and throughout 2022, demonstrating its defensive investment advantage during economic downturns, particularly as demand for non-discretionary goods remains stable.
- Market Performance Comparison: Despite VDC's strong performance in bear markets, it has only risen 20% over the past decade, while the Vanguard S&P 500 ETF (VOO) surged about 80%, indicating that defensive stocks lose appeal during bull markets, prompting investors to seek higher growth assets.
- Expense Ratio Discrepancy: VDC's expense ratio stands at 0.09%, higher than VOO's 0.03%, which makes the latter more attractive to long-term investors, thereby impacting VDC's long-term appeal.
- Investment Strategy Recommendation: For short-term investors, VDC may present an attractive defensive option, but for those seeking long-term growth, allocating too much to VDC is unwise, as it is not designed to outperform the market.
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Costco Reports $69.2 Billion in Q3 Sales, Third Largest Retailer Globally
- Strong Sales Performance: Costco's net sales reached $69.2 billion in Q3 of fiscal 2026, solidifying its position as the world's third-largest retailer, showcasing its strong appeal for low-priced, high-quality merchandise and enhancing its competitive edge.
- Impressive Investment Returns: Over the past decade, Costco's stock has generated a total return of 661%, meaning a $10,000 investment made ten years ago would now be worth $76,110, significantly outperforming the S&P 500's 328% return during the same period, highlighting its exceptional investment performance.
- Ongoing Expansion Strategy: Costco continues to open new warehouses both domestically and internationally while growing its membership base and occasionally raising annual fees, resulting in consistent revenue and profit growth despite macroeconomic fluctuations.
- Valuation Caution Advised: Despite Costco's strong performance, its current price-to-earnings ratio of 48.9 is nearly double that of the S&P 500 index, suggesting that investors should carefully consider their entry point, as this may not be the best time to buy the stock.
See More
Walmart+ Membership Drives Increased Spending
- Stock Price Decline: Following Walmart's fiscal Q1 2027 earnings report, its stock price dropped 11.5% from May 20 to May 29, indicating investor concerns about the company's future amidst rising inflation and fuel costs.
- Increased Member Spending: Walmart+ members spent four times more than non-members in Q1, and they visited Walmart's website seven times more frequently, highlighting the membership program's potential to enhance customer loyalty and sales.
- Revenue Growth: The subscription service revenue grew by double digits in Q1, indicating positive progress in diversifying revenue streams, even though overall fiscal guidance did not meet investor expectations.
- Future Outlook: Despite facing cautious financial forecasts in the short term, Walmart demonstrates long-term growth potential by continually increasing membership and expanding other revenue sources, particularly in a highly competitive retail market.
See More
Walmart Stock Drops 12% Amid Consumer Pressure
- Strong Performance Yet Stock Decline: Despite Walmart's fiscal Q1 2027 report showing a 7.3% year-over-year revenue increase and a 4.1% rise in U.S. comparable sales, its stock fell 12% in May, reflecting market concerns about future consumer pressures.
- E-commerce Market Share Growth: Walmart's e-commerce sales surged 26% year-over-year, with U.S. deliveries up 45%, indicating a significant advantage in leveraging its 5,200 stores for order fulfillment, thereby enhancing its competitive position in the retail market.
- Consumer Pressure Evident: CEO John Furner noted that consumers, particularly lower-income shoppers, are feeling pressure and seeking value from Walmart, a trend that could impact future sales performance, especially amid rising fuel prices.
- Investor Confidence in Long-term Stability: Despite facing short-term pressures, Walmart's status as a
See More
Costco's Sales and Profit Growth Continues
- Sales Performance: For the third quarter of fiscal 2026, Costco reported net sales of $69.2 billion, solidifying its position as the world's third-largest retailer, demonstrating strong competitive strength and consumer preference.
- Investment Returns: Over the past decade, Costco's stock has generated a total return of 661%, meaning a $10,000 investment made ten years ago would now be worth $76,110, significantly outperforming the S&P 500's 328% return, highlighting its exceptional investment performance.
- Expansion Strategy: Costco continues to open new warehouses both domestically and internationally while growing its membership base and occasionally raising annual fees, resulting in consistent revenue and profit growth despite fluctuations in the macroeconomic environment.
- Valuation Caution: With a current price-to-earnings ratio of 48.9, nearly double that of the S&P 500, investors should exercise caution when considering purchasing Costco shares, particularly given the high valuation at this time.
See More
Vanguard Consumer Staples ETF Outperforms S&P 500
- Historical Returns: Since its inception in 1957, the S&P 500 has generated an average annual return of approximately 10%, leading Vanguard's founder John Bogle to recommend that investors simply buy index funds to simplify their investment strategy.
- Vanguard Consumer Staples ETF Performance: The Vanguard Consumer Staples ETF (VDC) outperformed the S&P 500 during the Great Recession and throughout 2022, primarily due to its focus on companies that provide non-discretionary goods, which tend to maintain stable sales during economic downturns.
- Portfolio Composition: VDC passively tracks the MSCI US IMI Consumer Staples 25/50 index, comprising 104 consumer staples stocks, with major holdings in large-cap companies like Walmart (16.2%), Costco (12.3%), and Procter & Gamble (9.1%), which dominate its portfolio.
- Long-Term Investment Comparison: While VDC serves as a strong defensive play during bear markets, its price has only risen 20% over the past decade compared to VOO's 80% increase, and with an expense ratio of 0.09% versus VOO's 0.03%, VDC may not be the best choice for long-term investors.
See More
Analysis of VDC ETF Performance in Bear Markets
- Defensive Investment Advantage: The Vanguard Consumer Staples ETF (VDC) outperformed the S&P 500 from 2007 to 2009 and throughout 2022, demonstrating its defensive investment advantage during economic downturns, particularly as demand for non-discretionary goods remains stable.
- Market Performance Comparison: Despite VDC's strong performance in bear markets, it has only risen 20% over the past decade, while the Vanguard S&P 500 ETF (VOO) surged about 80%, indicating that defensive stocks lose appeal during bull markets, prompting investors to seek higher growth assets.
- Expense Ratio Discrepancy: VDC's expense ratio stands at 0.09%, higher than VOO's 0.03%, which makes the latter more attractive to long-term investors, thereby impacting VDC's long-term appeal.
- Investment Strategy Recommendation: For short-term investors, VDC may present an attractive defensive option, but for those seeking long-term growth, allocating too much to VDC is unwise, as it is not designed to outperform the market.
See More
Costco Reports $69.2 Billion in Q3 Sales, Third Largest Retailer Globally
- Strong Sales Performance: Costco's net sales reached $69.2 billion in Q3 of fiscal 2026, solidifying its position as the world's third-largest retailer, showcasing its strong appeal for low-priced, high-quality merchandise and enhancing its competitive edge.
- Impressive Investment Returns: Over the past decade, Costco's stock has generated a total return of 661%, meaning a $10,000 investment made ten years ago would now be worth $76,110, significantly outperforming the S&P 500's 328% return during the same period, highlighting its exceptional investment performance.
- Ongoing Expansion Strategy: Costco continues to open new warehouses both domestically and internationally while growing its membership base and occasionally raising annual fees, resulting in consistent revenue and profit growth despite macroeconomic fluctuations.
- Valuation Caution Advised: Despite Costco's strong performance, its current price-to-earnings ratio of 48.9 is nearly double that of the S&P 500 index, suggesting that investors should carefully consider their entry point, as this may not be the best time to buy the stock.
See More
Walmart+ Membership Drives Increased Spending
- Stock Price Decline: Following Walmart's fiscal Q1 2027 earnings report, its stock price dropped 11.5% from May 20 to May 29, indicating investor concerns about the company's future amidst rising inflation and fuel costs.
- Increased Member Spending: Walmart+ members spent four times more than non-members in Q1, and they visited Walmart's website seven times more frequently, highlighting the membership program's potential to enhance customer loyalty and sales.
- Revenue Growth: The subscription service revenue grew by double digits in Q1, indicating positive progress in diversifying revenue streams, even though overall fiscal guidance did not meet investor expectations.
- Future Outlook: Despite facing cautious financial forecasts in the short term, Walmart demonstrates long-term growth potential by continually increasing membership and expanding other revenue sources, particularly in a highly competitive retail market.
See More
Walmart Stock Drops 12% Amid Consumer Pressure
- Strong Performance Yet Stock Decline: Despite Walmart's fiscal Q1 2027 report showing a 7.3% year-over-year revenue increase and a 4.1% rise in U.S. comparable sales, its stock fell 12% in May, reflecting market concerns about future consumer pressures.
- E-commerce Market Share Growth: Walmart's e-commerce sales surged 26% year-over-year, with U.S. deliveries up 45%, indicating a significant advantage in leveraging its 5,200 stores for order fulfillment, thereby enhancing its competitive position in the retail market.
- Consumer Pressure Evident: CEO John Furner noted that consumers, particularly lower-income shoppers, are feeling pressure and seeking value from Walmart, a trend that could impact future sales performance, especially amid rising fuel prices.
- Investor Confidence in Long-term Stability: Despite facing short-term pressures, Walmart's status as a
See More
