Costco Maintains Growth as Member Spending Remains Steady
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 hour ago
0mins
Should l Buy COST?
Source: seekingalpha
- Steady Member Spending: Costco's CFO Gary Millerchip noted that despite economic uncertainties, members continue to spend consistently when strong value is offered, reinforcing the company's stable performance in the retail sector.
- Fuel Business Drives Traffic: Costco's fuel operations perform well in both high and low price environments, with about 50% of gas transactions resulting in warehouse visits, highlighting the strategic role of fuel in attracting customers and enhancing loyalty.
- Accelerated Digital Transformation: Costco's digital sales are growing rapidly, with digital members now accounting for over 40% of new memberships, indicating that efforts to enhance online shopping experiences and member engagement are yielding positive results.
- Ongoing Expansion Plans: Costco plans to open approximately 30 new warehouses annually over the next 5 to 10 years across the U.S. and international markets, demonstrating the company's confidence in long-term growth and strategic positioning.
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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: 992.230
Low
769.00
Averages
1061
High
1205
Current: 992.230
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 Ten-Year Investment Returns Remarkable
- Investment Return Analysis: A $1,000 investment in Costco ten years ago would be worth $6,500 today, or $7,725 with reinvested dividends, showcasing its strong performance against the S&P 500 index.
- Sustained Growth Drivers: From fiscal 2020 to 2025, Costco's revenue and EPS grew at CAGRs of 10.5% and 15.1%, respectively, with warehouse count increasing from 795 to 914 and cardholders rising from 105.5 million to 140.6 million, demonstrating robust market expansion capabilities.
- Membership Renewal Challenges: Despite raising membership fees for the first time in 2024, Costco's global renewal rate dipped to 89.7% in the first half of fiscal 2026, primarily due to younger digitally signed members being more likely to cancel.
- Future Growth Expectations: Analysts forecast Costco's revenue and EPS to grow at CAGRs of 8% and 11% from 2025 to 2028, but with a current P/E ratio of 49, the stock may only rise 34% over the next decade.
See More
Costco Maintains Growth as Member Spending Remains Steady
- Steady Member Spending: Costco's CFO Gary Millerchip noted that despite economic uncertainties, members continue to spend consistently when strong value is offered, reinforcing the company's stable performance in the retail sector.
- Fuel Business Drives Traffic: Costco's fuel operations perform well in both high and low price environments, with about 50% of gas transactions resulting in warehouse visits, highlighting the strategic role of fuel in attracting customers and enhancing loyalty.
- Accelerated Digital Transformation: Costco's digital sales are growing rapidly, with digital members now accounting for over 40% of new memberships, indicating that efforts to enhance online shopping experiences and member engagement are yielding positive results.
- Ongoing Expansion Plans: Costco plans to open approximately 30 new warehouses annually over the next 5 to 10 years across the U.S. and international markets, demonstrating the company's confidence in long-term growth and strategic positioning.
See More
Middle East Conflict Escalates Oil Prices
- Oil Price Surge: The escalation of conflict in the Middle East has pushed Brent and WTI crude prices back to nearly $100 per barrel, contributing to a decline in the stock market, with the S&P 500 down 1.5%, Dow down 1.6%, and Nasdaq down 1.8%, indicating market sensitivity to oil price fluctuations.
- Supply Disruption Impact: The International Energy Agency has labeled the current situation as the 'largest supply disruption in history,' with estimates suggesting that a closure of the Strait of Hormuz could drive crude prices to $150 or higher, reflecting a pessimistic outlook on future oil prices.
- Trade Deficit Improvement: The U.S. trade deficit fell by 25% in January, as exports of industrial supplies offset declines in consumer goods, demonstrating resilience in the U.S. economy despite significant tariff revenue losses following a Supreme Court ruling.
- Market Sentiment Shift: The rise in oil prices and the drop in the stock market have led investors to lose confidence in a swift resolution to the conflict, prompting analysts to consider the possibility of a longer-term conflict, which could exert greater pressure on the markets.
See More
US Launches Trade Investigations into 60 Economies for Forced Labor
- Trade Investigations Launched: The U.S. initiated new trade investigations into 60 economies on Thursday to assess whether they have failed to curb imports of goods made with forced labor, a move that could impact trade relations with countries like China and the EU.
- Legal Basis: These investigations are conducted under Section 301(b) of the Trade Act of 1974, allowing the U.S. to impose tariffs on countries found engaging in unfair trade practices without congressional authorization, reflecting a tough stance in U.S. trade policy.
- International Response: The U.S. Trade Representative stated that despite international consensus against forced labor, governments have inadequately enforced bans on such goods, which could negatively affect U.S. workers and businesses.
- Impact on Future Negotiations: Launching these investigations just before the upcoming Trump-Xi meeting may affect the negotiation atmosphere, with experts suggesting that unilateral measures could hinder consensus, emphasizing the need for cooperative solutions.
See More
Long-Term Investment Value of Coca-Cola, Costco, and Hormel Foods
- Coca-Cola's Stability: Operating in over 200 countries with a portfolio of more than 200 beverage brands, Coca-Cola reported a 5% organic revenue increase for fiscal year 2025 and expects a 4% to 5% growth in 2026, highlighting its strong potential as a long-term investment.
- Costco's Membership Model: Costco's impressive membership renewal rate and competitive pricing strategy led to an 8.1% net sales increase in fiscal year 2025, further improving to 8.7% in the first two quarters of 2026, showcasing its robust growth momentum in the retail market.
- Hormel Foods' Dividend King Status: As a Dividend King, Hormel Foods has raised its dividend for 60 consecutive years, and despite recent challenges, it reported a 2% net sales growth last quarter while reaffirming its 2026 organic sales growth guidance of 1% to 4%, demonstrating its stable business foundation.
- Attractiveness for Long-Term Investment: These three companies not only possess strong brand influence in their respective sectors but also exhibit solid financial performance and consistent dividend payments, making them suitable for long-term investors seeking stable returns over the coming decades.
See More
Investment Value of Coca-Cola, Costco, and Hormel
- Coca-Cola's Stability: Coca-Cola has consistently increased its dividends for six decades, currently boasting a yield of 2.67%, and its asset-light business model ensures high profitability, making it attractive for long-term investors.
- Costco's Growth Potential: Costco reported an 8.1% increase in net sales for fiscal year 2025, improving to 8.7% in the first two quarters of 2026; despite a low dividend yield of 0.52%, its membership renewal rates and international expansion strategies are set to drive future growth.
- Hormel's Investment Opportunity: As another Dividend King, Hormel has raised its dividends for 60 years, with a current yield of 5.0%; although its stock has dropped 15% over the past year, its latest earnings report shows net sales growth for five consecutive quarters, demonstrating strong business resilience.
- Long-term Investment Choices: These three companies, with their strong brand recognition and solid business fundamentals, represent ideal options for long-term investors, especially as the defensive characteristics of consumer staples become increasingly important amid economic uncertainties.
See More
Costco's Ten-Year Investment Returns Remarkable
- Investment Return Analysis: A $1,000 investment in Costco ten years ago would be worth $6,500 today, or $7,725 with reinvested dividends, showcasing its strong performance against the S&P 500 index.
- Sustained Growth Drivers: From fiscal 2020 to 2025, Costco's revenue and EPS grew at CAGRs of 10.5% and 15.1%, respectively, with warehouse count increasing from 795 to 914 and cardholders rising from 105.5 million to 140.6 million, demonstrating robust market expansion capabilities.
- Membership Renewal Challenges: Despite raising membership fees for the first time in 2024, Costco's global renewal rate dipped to 89.7% in the first half of fiscal 2026, primarily due to younger digitally signed members being more likely to cancel.
- Future Growth Expectations: Analysts forecast Costco's revenue and EPS to grow at CAGRs of 8% and 11% from 2025 to 2028, but with a current P/E ratio of 49, the stock may only rise 34% over the next decade.
See More
Costco Maintains Growth as Member Spending Remains Steady
- Steady Member Spending: Costco's CFO Gary Millerchip noted that despite economic uncertainties, members continue to spend consistently when strong value is offered, reinforcing the company's stable performance in the retail sector.
- Fuel Business Drives Traffic: Costco's fuel operations perform well in both high and low price environments, with about 50% of gas transactions resulting in warehouse visits, highlighting the strategic role of fuel in attracting customers and enhancing loyalty.
- Accelerated Digital Transformation: Costco's digital sales are growing rapidly, with digital members now accounting for over 40% of new memberships, indicating that efforts to enhance online shopping experiences and member engagement are yielding positive results.
- Ongoing Expansion Plans: Costco plans to open approximately 30 new warehouses annually over the next 5 to 10 years across the U.S. and international markets, demonstrating the company's confidence in long-term growth and strategic positioning.
See More
Middle East Conflict Escalates Oil Prices
- Oil Price Surge: The escalation of conflict in the Middle East has pushed Brent and WTI crude prices back to nearly $100 per barrel, contributing to a decline in the stock market, with the S&P 500 down 1.5%, Dow down 1.6%, and Nasdaq down 1.8%, indicating market sensitivity to oil price fluctuations.
- Supply Disruption Impact: The International Energy Agency has labeled the current situation as the 'largest supply disruption in history,' with estimates suggesting that a closure of the Strait of Hormuz could drive crude prices to $150 or higher, reflecting a pessimistic outlook on future oil prices.
- Trade Deficit Improvement: The U.S. trade deficit fell by 25% in January, as exports of industrial supplies offset declines in consumer goods, demonstrating resilience in the U.S. economy despite significant tariff revenue losses following a Supreme Court ruling.
- Market Sentiment Shift: The rise in oil prices and the drop in the stock market have led investors to lose confidence in a swift resolution to the conflict, prompting analysts to consider the possibility of a longer-term conflict, which could exert greater pressure on the markets.
See More
US Launches Trade Investigations into 60 Economies for Forced Labor
- Trade Investigations Launched: The U.S. initiated new trade investigations into 60 economies on Thursday to assess whether they have failed to curb imports of goods made with forced labor, a move that could impact trade relations with countries like China and the EU.
- Legal Basis: These investigations are conducted under Section 301(b) of the Trade Act of 1974, allowing the U.S. to impose tariffs on countries found engaging in unfair trade practices without congressional authorization, reflecting a tough stance in U.S. trade policy.
- International Response: The U.S. Trade Representative stated that despite international consensus against forced labor, governments have inadequately enforced bans on such goods, which could negatively affect U.S. workers and businesses.
- Impact on Future Negotiations: Launching these investigations just before the upcoming Trump-Xi meeting may affect the negotiation atmosphere, with experts suggesting that unilateral measures could hinder consensus, emphasizing the need for cooperative solutions.
See More
Long-Term Investment Value of Coca-Cola, Costco, and Hormel Foods
- Coca-Cola's Stability: Operating in over 200 countries with a portfolio of more than 200 beverage brands, Coca-Cola reported a 5% organic revenue increase for fiscal year 2025 and expects a 4% to 5% growth in 2026, highlighting its strong potential as a long-term investment.
- Costco's Membership Model: Costco's impressive membership renewal rate and competitive pricing strategy led to an 8.1% net sales increase in fiscal year 2025, further improving to 8.7% in the first two quarters of 2026, showcasing its robust growth momentum in the retail market.
- Hormel Foods' Dividend King Status: As a Dividend King, Hormel Foods has raised its dividend for 60 consecutive years, and despite recent challenges, it reported a 2% net sales growth last quarter while reaffirming its 2026 organic sales growth guidance of 1% to 4%, demonstrating its stable business foundation.
- Attractiveness for Long-Term Investment: These three companies not only possess strong brand influence in their respective sectors but also exhibit solid financial performance and consistent dividend payments, making them suitable for long-term investors seeking stable returns over the coming decades.
See More
Investment Value of Coca-Cola, Costco, and Hormel
- Coca-Cola's Stability: Coca-Cola has consistently increased its dividends for six decades, currently boasting a yield of 2.67%, and its asset-light business model ensures high profitability, making it attractive for long-term investors.
- Costco's Growth Potential: Costco reported an 8.1% increase in net sales for fiscal year 2025, improving to 8.7% in the first two quarters of 2026; despite a low dividend yield of 0.52%, its membership renewal rates and international expansion strategies are set to drive future growth.
- Hormel's Investment Opportunity: As another Dividend King, Hormel has raised its dividends for 60 years, with a current yield of 5.0%; although its stock has dropped 15% over the past year, its latest earnings report shows net sales growth for five consecutive quarters, demonstrating strong business resilience.
- Long-term Investment Choices: These three companies, with their strong brand recognition and solid business fundamentals, represent ideal options for long-term investors, especially as the defensive characteristics of consumer staples become increasingly important amid economic uncertainties.
See More
