Costco's Ten-Year Investment Returns Remarkable
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2 hours ago
0mins
Should l Buy COST?
Source: Fool
- 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.
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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
Investment Opportunity Analysis for Nasdaq-100 Index
- Historical Return Potential: The Nasdaq-100 has achieved an average five-year return of 103% over the past two decades, with historical data suggesting that it could nearly double investors' money in the next five years, making it an attractive option for investors.
- AI-Driven Growth: The Invesco QQQ Trust is heavily invested in AI-related stocks, with top holdings including tech giants like Nvidia and Apple, which are expected to benefit from the rapid development of AI technologies, further enhancing market performance.
- Market Correction Timing: The Nasdaq Composite is currently in a market correction, down over 10% from its all-time high, and historical data indicates that such corrections have led to an average five-year return of 146%, presenting a favorable investment opportunity.
- Concentration Risk Warning: While the Invesco QQQ Trust has a reasonable expense ratio of 0.18%, its top ten holdings account for nearly 50% of its performance, prompting investors to carefully consider the concentration risk and potential price volatility.
See More
Investment Value Analysis of Costco vs Amazon
- Costco's Market Performance: Costco offers essential goods at extremely low prices through bulk purchasing, and despite a gross margin of only 12.93%, it generates profits primarily from membership fees, demonstrating stability and appeal in any market environment.
- Amazon's Profit Drivers: Amazon's primary profit source is its cloud services unit, AWS, which has seen significant revenue growth amid rising demand for AI products, while its retail business is also improving its cost structure to favor earnings growth.
- Valuation Changes: Costco's forward P/E ratio has decreased from 55 to 48, while Amazon's has dropped from 35 to 25, indicating that both companies are experiencing valuation corrections, providing investors with more attractive buying opportunities.
- Investment Strategy Choices: For conservative investors, Costco may be more appealing due to its strong retail profile and dividend payments, while growth-seeking investors might prefer Amazon for its dominance in the high-potential AI sector.
See More
Nasdaq-100 Expected to Perform Well in Future
- Historical Returns: The Nasdaq-100 has achieved a 103% average five-year total return over the past two decades, indicating that investors could potentially double their money in the next five years, thus drawing increased investor interest.
- Market Correction Opportunity: The Nasdaq Composite fell into correction territory last month, which historically has been viewed as a good time to invest; after 13 market corrections, the Nasdaq-100's five-year total returns averaged 146%, suggesting a favorable outlook.
- AI-Driven Growth: The Invesco QQQ Trust is heavily invested in AI-related stocks, with over 80% of its assets concentrated in technology and consumer discretionary sectors, which are expected to perform well due to the rise of artificial intelligence, enhancing its investment appeal.
- Reasonable Expense Ratio: The Invesco QQQ Trust has an expense ratio of 0.18%, meaning shareholders pay $18 annually for every $10,000 invested; despite concentration risks, the current buying opportunity remains attractive for long-term investors.
See More
Costco vs. Amazon: Retail Giants Compete
- Market Performance: Both Costco and Amazon are excelling in the retail environment, with Costco's shares currently trading at 48 times forward earnings, down from 55 a year ago, indicating stable profitability through low-priced goods and membership fees.
- Profit Model: Costco generates profits through bulk purchasing and membership fees, attracting customers with lower prices despite lower margins, which has driven its consistent earnings growth over time.
- Amazon's Edge: Amazon's primary profit driver is its cloud services unit, AWS, which has seen significant revenue growth amid rising demand for AI products, while its retail business also shows steady growth, with shares now at 25 times forward earnings, down from 35 six months ago.
- Investment Choices: Both companies are considered excellent additions to a long-term portfolio, trading at more attractive levels than a few months ago, allowing investors to choose between Costco's stability or Amazon's growth potential based on their risk preferences.
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
Investment Opportunity Analysis for Nasdaq-100 Index
- Historical Return Potential: The Nasdaq-100 has achieved an average five-year return of 103% over the past two decades, with historical data suggesting that it could nearly double investors' money in the next five years, making it an attractive option for investors.
- AI-Driven Growth: The Invesco QQQ Trust is heavily invested in AI-related stocks, with top holdings including tech giants like Nvidia and Apple, which are expected to benefit from the rapid development of AI technologies, further enhancing market performance.
- Market Correction Timing: The Nasdaq Composite is currently in a market correction, down over 10% from its all-time high, and historical data indicates that such corrections have led to an average five-year return of 146%, presenting a favorable investment opportunity.
- Concentration Risk Warning: While the Invesco QQQ Trust has a reasonable expense ratio of 0.18%, its top ten holdings account for nearly 50% of its performance, prompting investors to carefully consider the concentration risk and potential price volatility.
See More
Investment Value Analysis of Costco vs Amazon
- Costco's Market Performance: Costco offers essential goods at extremely low prices through bulk purchasing, and despite a gross margin of only 12.93%, it generates profits primarily from membership fees, demonstrating stability and appeal in any market environment.
- Amazon's Profit Drivers: Amazon's primary profit source is its cloud services unit, AWS, which has seen significant revenue growth amid rising demand for AI products, while its retail business is also improving its cost structure to favor earnings growth.
- Valuation Changes: Costco's forward P/E ratio has decreased from 55 to 48, while Amazon's has dropped from 35 to 25, indicating that both companies are experiencing valuation corrections, providing investors with more attractive buying opportunities.
- Investment Strategy Choices: For conservative investors, Costco may be more appealing due to its strong retail profile and dividend payments, while growth-seeking investors might prefer Amazon for its dominance in the high-potential AI sector.
See More
Nasdaq-100 Expected to Perform Well in Future
- Historical Returns: The Nasdaq-100 has achieved a 103% average five-year total return over the past two decades, indicating that investors could potentially double their money in the next five years, thus drawing increased investor interest.
- Market Correction Opportunity: The Nasdaq Composite fell into correction territory last month, which historically has been viewed as a good time to invest; after 13 market corrections, the Nasdaq-100's five-year total returns averaged 146%, suggesting a favorable outlook.
- AI-Driven Growth: The Invesco QQQ Trust is heavily invested in AI-related stocks, with over 80% of its assets concentrated in technology and consumer discretionary sectors, which are expected to perform well due to the rise of artificial intelligence, enhancing its investment appeal.
- Reasonable Expense Ratio: The Invesco QQQ Trust has an expense ratio of 0.18%, meaning shareholders pay $18 annually for every $10,000 invested; despite concentration risks, the current buying opportunity remains attractive for long-term investors.
See More
Costco vs. Amazon: Retail Giants Compete
- Market Performance: Both Costco and Amazon are excelling in the retail environment, with Costco's shares currently trading at 48 times forward earnings, down from 55 a year ago, indicating stable profitability through low-priced goods and membership fees.
- Profit Model: Costco generates profits through bulk purchasing and membership fees, attracting customers with lower prices despite lower margins, which has driven its consistent earnings growth over time.
- Amazon's Edge: Amazon's primary profit driver is its cloud services unit, AWS, which has seen significant revenue growth amid rising demand for AI products, while its retail business also shows steady growth, with shares now at 25 times forward earnings, down from 35 six months ago.
- Investment Choices: Both companies are considered excellent additions to a long-term portfolio, trading at more attractive levels than a few months ago, allowing investors to choose between Costco's stability or Amazon's growth potential based on their risk preferences.
See More
