Costco Stock Potential Analysis
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 hour ago
0mins
Should l Buy COST?
Source: Fool
- Significant Growth: From fiscal 2020 to 2025, Costco increased its warehouse count from 795 to 914 and its total cardholders from 105.5 million to 140.6 million, demonstrating robust sales and membership growth despite macroeconomic challenges like inflation and rising interest rates.
- Renewal Rate Fluctuations: In Q1 of fiscal 2026, Costco's global renewal rate dipped to 89.7% even as cardholders rose to 145.9 million, indicating potential pressure on renewal rates among digitally signed members, which could impact future revenue stability.
- Future Growth Expectations: Analysts project Costco's revenue and EPS to grow at CAGRs of 8% and 11% from 2025 to 2028, but if it trades at a more reasonable 25 times forward earnings, its stock could decline nearly 40% to $617, despite steady growth rates.
- Stock Price Target Challenges: While Costco's stock could rise over 20% to $1,209 at a 49 times earnings valuation, its current frothy levels may lead to sideways trading or slight declines over the next two years until renewal rates stabilize.
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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: 996.080
Low
769.00
Averages
1061
High
1205
Current: 996.080
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 Stock Potential Analysis
- Significant Growth: From fiscal 2020 to 2025, Costco increased its warehouse count from 795 to 914 and its total cardholders from 105.5 million to 140.6 million, demonstrating robust sales and membership growth despite macroeconomic challenges like inflation and rising interest rates.
- Renewal Rate Fluctuations: In Q1 of fiscal 2026, Costco's global renewal rate dipped to 89.7% even as cardholders rose to 145.9 million, indicating potential pressure on renewal rates among digitally signed members, which could impact future revenue stability.
- Future Growth Expectations: Analysts project Costco's revenue and EPS to grow at CAGRs of 8% and 11% from 2025 to 2028, but if it trades at a more reasonable 25 times forward earnings, its stock could decline nearly 40% to $617, despite steady growth rates.
- Stock Price Target Challenges: While Costco's stock could rise over 20% to $1,209 at a 49 times earnings valuation, its current frothy levels may lead to sideways trading or slight declines over the next two years until renewal rates stabilize.
See More
Walmart's Stock Decline Post-Earnings Proves Short-Lived
- Conservative Guidance: Walmart's earnings per share forecast of $2.75 to $2.85 falls short of the $2.96 consensus, causing a 3.6% premarket drop; however, analysts suggest this conservative approach may be strategic, setting a low bar for future performance.
- Stock Recovery: Despite the initial decline, Walmart's shares rebounded to a 2.7% increase by the end of the trading day, reflecting investor confidence in the company's outlook, with analysts viewing any weakness as a buying opportunity.
- Market Share Gains: The retailer reported strong market share growth in the latest quarter, particularly among affluent households earning over $100,000 annually, indicating its expanding influence in a competitive retail landscape and reinforcing its market position.
- Tech-Driven Growth: Walmart's investment in AI initiatives, including a partnership with OpenAI for enhanced customer experiences, alongside expanding its online marketplace to over 500 million items and offering one-hour delivery, significantly boosts its competitive edge in the retail sector.
See More
Costco Starts 2026 Strong with 18% Share Price Increase
- Strong Stock Performance: As of February 16, 2026, Costco's shares have risen by 18%, extending a remarkable total return of 205% over the past five years, reflecting robust market performance and investor confidence.
- Clear Expansion Plans: Costco plans to open 28 new stores in the current fiscal year, with a future goal of over 30 annually, which is expected to enhance its competitiveness in both U.S. and international markets, catering to global consumer demand for quality merchandise.
- Sustained Earnings Growth: Between fiscal 2020 and 2025, the company anticipates a compound annual growth rate of 15.1% in earnings per share (EPS), demonstrating operational efficiency under economies of scale, with projected annual EPS growth of 10.7% over the next three years.
- Significant Valuation Risks: With a current price-to-earnings (P/E) ratio of 54.6, resembling that of high-growth tech firms, investors should cautiously assess its long-term investment value, especially as future growth opportunities diminish, potentially leading to underperformance relative to the broader market.
See More
Walmart's Guidance Falls Short of Expectations
- Guidance Miss: Walmart's latest earnings report projects adjusted EPS for the fiscal year between $2.75 and $2.85, falling short of Wall Street's $2.96 forecast, resulting in a premarket stock drop of over 2%.
- Challenges Under New CEO: With John Furner taking the helm amid intensifying market competition, investor focus on his strategic direction is increasing, which could impact stock performance.
- Market Performance Review: Despite a recent stock increase of over 21% and nearly 175% over the past five years, the lowered guidance may raise concerns about Walmart's future growth potential among investors.
- Industry Dynamics Impact: On the same day as Walmart's report, Wayfair posted its first annual sales gain, while Etsy's stock rose after beating earnings expectations, indicating a potential pressure on Walmart from the recovering retail sector.
See More
Nike's Turnaround: Cutting Classics Sales to Rebuild Brand
- Brand Restructuring Strategy: Under CEO Elliott Hill, Nike plans to cut Classics sales by over $4 billion by the end of fiscal 2026, aiming to rebuild its brand image through reduced promotions and a return to scarcity, thereby enhancing market competitiveness.
- Collaborative Innovation: Nike's partnership with Costco to launch the Kirkland Signature x Nike SB Dunk Low, limited to 8 Costco locations at a price of $135, has seen resale values exceed $400, demonstrating Nike's ability to generate market buzz through scarcity.
- North American Market Recovery: Although Nike's overall revenue grew by only 1% in Q2 of fiscal 2026, its North America wholesale business saw a 20% year-over-year increase, indicating that retail partners are re-engaging with Nike following the company's strategic adjustments.
- Long-term Investment Signal: The reduction in Classics sales and the collaboration with Costco provide positive signals for long-term investors, indicating that Nike is laying the groundwork for a successful turnaround, even though the recovery path may not be straightforward.
See More
Walmart Earnings Preview: Digital Transformation and New CEO Strategy
- Earnings Expectations: Walmart is expected to report Q4 earnings of 73 cents per share and revenue of $190.43 billion, reflecting the company's ongoing investment and transformation in digital business and artificial intelligence.
- Full-Year Sales Outlook: The company anticipates full-year net sales growth between 4.8% and 5.1%, with adjusted earnings per share ranging from $2.58 to $2.63, indicating a positive outlook for future market conditions.
- New CEO Strategy: New CEO John Furner is set to continue focusing on online business growth and attracting more middle to high-income customers, aiming to increase the company's share in higher-margin sectors like third-party marketplaces and advertising.
- Market Dynamics: Despite Walmart's stock rising about 22% over the past year, it is expected to lose the title of largest retailer by annual revenue, as Amazon has already surpassed Walmart in quarterly revenue, highlighting intensifying competition in the retail market.
See More
Costco Stock Potential Analysis
- Significant Growth: From fiscal 2020 to 2025, Costco increased its warehouse count from 795 to 914 and its total cardholders from 105.5 million to 140.6 million, demonstrating robust sales and membership growth despite macroeconomic challenges like inflation and rising interest rates.
- Renewal Rate Fluctuations: In Q1 of fiscal 2026, Costco's global renewal rate dipped to 89.7% even as cardholders rose to 145.9 million, indicating potential pressure on renewal rates among digitally signed members, which could impact future revenue stability.
- Future Growth Expectations: Analysts project Costco's revenue and EPS to grow at CAGRs of 8% and 11% from 2025 to 2028, but if it trades at a more reasonable 25 times forward earnings, its stock could decline nearly 40% to $617, despite steady growth rates.
- Stock Price Target Challenges: While Costco's stock could rise over 20% to $1,209 at a 49 times earnings valuation, its current frothy levels may lead to sideways trading or slight declines over the next two years until renewal rates stabilize.
See More
Walmart's Stock Decline Post-Earnings Proves Short-Lived
- Conservative Guidance: Walmart's earnings per share forecast of $2.75 to $2.85 falls short of the $2.96 consensus, causing a 3.6% premarket drop; however, analysts suggest this conservative approach may be strategic, setting a low bar for future performance.
- Stock Recovery: Despite the initial decline, Walmart's shares rebounded to a 2.7% increase by the end of the trading day, reflecting investor confidence in the company's outlook, with analysts viewing any weakness as a buying opportunity.
- Market Share Gains: The retailer reported strong market share growth in the latest quarter, particularly among affluent households earning over $100,000 annually, indicating its expanding influence in a competitive retail landscape and reinforcing its market position.
- Tech-Driven Growth: Walmart's investment in AI initiatives, including a partnership with OpenAI for enhanced customer experiences, alongside expanding its online marketplace to over 500 million items and offering one-hour delivery, significantly boosts its competitive edge in the retail sector.
See More
Costco Starts 2026 Strong with 18% Share Price Increase
- Strong Stock Performance: As of February 16, 2026, Costco's shares have risen by 18%, extending a remarkable total return of 205% over the past five years, reflecting robust market performance and investor confidence.
- Clear Expansion Plans: Costco plans to open 28 new stores in the current fiscal year, with a future goal of over 30 annually, which is expected to enhance its competitiveness in both U.S. and international markets, catering to global consumer demand for quality merchandise.
- Sustained Earnings Growth: Between fiscal 2020 and 2025, the company anticipates a compound annual growth rate of 15.1% in earnings per share (EPS), demonstrating operational efficiency under economies of scale, with projected annual EPS growth of 10.7% over the next three years.
- Significant Valuation Risks: With a current price-to-earnings (P/E) ratio of 54.6, resembling that of high-growth tech firms, investors should cautiously assess its long-term investment value, especially as future growth opportunities diminish, potentially leading to underperformance relative to the broader market.
See More
Walmart's Guidance Falls Short of Expectations
- Guidance Miss: Walmart's latest earnings report projects adjusted EPS for the fiscal year between $2.75 and $2.85, falling short of Wall Street's $2.96 forecast, resulting in a premarket stock drop of over 2%.
- Challenges Under New CEO: With John Furner taking the helm amid intensifying market competition, investor focus on his strategic direction is increasing, which could impact stock performance.
- Market Performance Review: Despite a recent stock increase of over 21% and nearly 175% over the past five years, the lowered guidance may raise concerns about Walmart's future growth potential among investors.
- Industry Dynamics Impact: On the same day as Walmart's report, Wayfair posted its first annual sales gain, while Etsy's stock rose after beating earnings expectations, indicating a potential pressure on Walmart from the recovering retail sector.
See More
Nike's Turnaround: Cutting Classics Sales to Rebuild Brand
- Brand Restructuring Strategy: Under CEO Elliott Hill, Nike plans to cut Classics sales by over $4 billion by the end of fiscal 2026, aiming to rebuild its brand image through reduced promotions and a return to scarcity, thereby enhancing market competitiveness.
- Collaborative Innovation: Nike's partnership with Costco to launch the Kirkland Signature x Nike SB Dunk Low, limited to 8 Costco locations at a price of $135, has seen resale values exceed $400, demonstrating Nike's ability to generate market buzz through scarcity.
- North American Market Recovery: Although Nike's overall revenue grew by only 1% in Q2 of fiscal 2026, its North America wholesale business saw a 20% year-over-year increase, indicating that retail partners are re-engaging with Nike following the company's strategic adjustments.
- Long-term Investment Signal: The reduction in Classics sales and the collaboration with Costco provide positive signals for long-term investors, indicating that Nike is laying the groundwork for a successful turnaround, even though the recovery path may not be straightforward.
See More
Walmart Earnings Preview: Digital Transformation and New CEO Strategy
- Earnings Expectations: Walmart is expected to report Q4 earnings of 73 cents per share and revenue of $190.43 billion, reflecting the company's ongoing investment and transformation in digital business and artificial intelligence.
- Full-Year Sales Outlook: The company anticipates full-year net sales growth between 4.8% and 5.1%, with adjusted earnings per share ranging from $2.58 to $2.63, indicating a positive outlook for future market conditions.
- New CEO Strategy: New CEO John Furner is set to continue focusing on online business growth and attracting more middle to high-income customers, aiming to increase the company's share in higher-margin sectors like third-party marketplaces and advertising.
- Market Dynamics: Despite Walmart's stock rising about 22% over the past year, it is expected to lose the title of largest retailer by annual revenue, as Amazon has already surpassed Walmart in quarterly revenue, highlighting intensifying competition in the retail market.
See More
