Costco (COST) AI Stock Analysis

• Market Cap: $405.69B
• Dividend Yield: 0.53%
• Average Volume (3M): 2.36M
• Price to Earnings (P/E): 50.2
• Beta (1Y): 0.63
• Revenue Growth: 8.17%
• EPS Growth: 9.92%
• Country: US
• Employees: 333,000
• Sector: Consumer Defensive
• Sector Strength: 42
• Industry: Discount Stores
• EPS (TTM): 5.87
• Shares Outstanding: 443,179,170
• 10 Day Avg. Volume: 2,951,596
• 30 Day Avg. Volume: 2,363,096
• PEG Ratio: 5.23
• Price to Book (P/B): 14.36
• Price to Sales (P/S): 1.52
• P/FCF Ratio: 53.44
• Enterprise Value/Market Cap: 1.02
• Enterprise Value/Revenue: 1.50
• Enterprise Value/Gross Profit: 11.72
• Enterprise Value/Ebitda: 30.91
• 1Y Price Target: $1,090.44
• Price Target Upside: 17.25% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 24

• Rating: 68 Neutral
• Price Target: $998.00 ▲(7.31% Upside)

Costco's strong financial performance and positive earnings call are the most significant factors supporting its stock score. However, technical analysis indicates bearish momentum, and the high valuation suggests limited upside potential. The overall outlook is cautiously optimistic, with financial stability and growth prospects balanced by current market conditions.

Positive Factors

Revenue Growth

Consistent revenue growth indicates strong market demand and effective business strategies, supporting long-term financial stability and expansion.

Membership Growth

Rising membership numbers and fee income reflect strong customer loyalty and a reliable revenue stream, enhancing Costco's competitive edge.

Warehouse Expansion

Expanding warehouse locations strengthens Costco's market presence and accessibility, driving future sales growth and customer acquisition.

Negative Factors

SG&A Rate Increase

Rising SG&A expenses can pressure margins, potentially affecting profitability if not managed alongside revenue growth.

Impact of Tariffs

Tariff challenges may lead to increased costs or pricing adjustments, impacting competitive pricing strategies and consumer demand.

Membership Renewal Rate Decline

Declining renewal rates could weaken the membership model's stability, affecting long-term revenue consistency and customer retention.

Costco Business Overview & Revenue Model

Company Description

Costco Wholesale Corporation, together with its subsidiaries, engages in the operation of membership warehouses in the United States, Puerto Rico, Canada, the United Kingdom, Mexico, Japan, Korea, Australia, Spain, France, Iceland, China, and Taiwan. It offers branded and private-label products in a range of merchandise categories. The company offers sundries, dry groceries, candies, coolers, freezers, liquor, and tobacco and deli products; appliances, electronics, health and beauty aids, hardware, garden and patio products, sporting goods, tires, toys and seasonal products, office supplies, automotive care products, postages, tickets, apparel, small appliances, furniture, domestics, housewares, special order kiosks, and jewelry; and meat, produce, service deli, and bakery products. It also operates pharmacies, opticals, food courts, hearing-aid centers, and tire installation centers, as well as 636 gas stations; and offers business delivery, travel, same-day grocery, and various other services online in various countries. As of August 29, 2021, the company operated 815 membership warehouses, including 564 in the United States and Puerto Rico, 105 in Canada, 39 in Mexico, 30 in Japan, 29 in the United Kingdom, 16 in South Korea, 14 in Taiwan, 12 in Australia, 3 in Spain, 1 in Iceland, 1 in France, and 1 in China. It also operates e-commerce websites in the United States, Canada, the United Kingdom, Mexico, South Korea, Taiwan, Japan, and Australia. The company was formerly known as Costco Companies, Inc. and changed its name to Costco Wholesale Corporation in August 1999. Costco Wholesale Corporation was founded in 1976 and is based in Issaquah, Washington.

How the Company Makes Money

Costco generates revenue primarily through its membership fees and the sale of goods. Members pay an annual fee to access the warehouse clubs, which provides a steady income stream. In addition, the company earns significant revenue from the sale of a wide range of products, including groceries, electronics, and household items, often at lower prices than traditional retailers due to its bulk purchasing and efficient operations. The company also benefits from ancillary revenue streams such as its pharmacy, optical, and travel services. Costco's strong focus on customer satisfaction and low prices fosters member loyalty, leading to a high renewal rate for memberships, which further contributes to its financial success.

Costco Financial Statement Overview

Summary

Costco demonstrates strong financial health with consistent revenue growth, stable net profit margins, low leverage, and robust cash flow management. Despite some missing metrics, the company's financial position is stable and suitable for continued growth.

Income Statement

Costco has demonstrated consistent revenue growth, with a 2.4% increase in the latest year. The net profit margin is stable at approximately 2.94%, indicating efficient cost management. However, the gross profit margin is not provided, which limits a full assessment of cost efficiency. Overall, the company shows strong profitability and growth trends.

Balance Sheet

The debt-to-equity ratio has improved over the years, currently at a low level, indicating strong financial stability. Return on equity is not provided for the latest year, but historical data suggests a solid performance. The equity ratio is not available, which limits a complete analysis of asset financing. Overall, Costco maintains a strong balance sheet with low leverage.

Cash Flow

Costco's free cash flow has grown by 7.1%, reflecting strong cash generation capabilities. The free cash flow to net income ratio is healthy at 58.77%, indicating efficient conversion of income to cash. However, the operating cash flow to net income ratio is not provided, limiting a full assessment of cash flow efficiency. Overall, Costco demonstrates robust cash flow management.

Breakdown	TTM	Dec 2025	Dec 2018	Dec 2017	Dec 2016
Income Statement
Total Revenue	275.24B	275.24B	141.58B	129.03B	118.72B
Gross Profit	35.35B	35.35B	18.42B	17.14B	15.82B
EBITDA	13.40B	13.40B	6.04B	5.54B	5.01B
Net Income	8.10B	8.10B	3.13B	2.68B	2.35B
Balance Sheet
Total Assets	77.10B	77.10B	40.83B	36.35B	33.16B
Cash, Cash Equivalents and Short-Term Investments	15.28B	15.28B	7.26B	5.78B	4.73B
Total Debt	8.17B	8.17B	6.58B	6.57B	5.16B
Total Liabilities	47.94B	47.94B	27.73B	25.27B	20.83B
Stockholders Equity	29.16B	29.16B	12.80B	10.78B	12.08B
Cash Flow
Free Cash Flow	7.84B	7.84B	2.81B	4.22B	643.00M
Operating Cash Flow	13.34B	13.34B	5.77B	6.73B	3.29B
Investing Cash Flow	-5.31B	-5.31B	-2.95B	-2.37B	-2.35B
Financing Cash Flow	-3.77B	-3.77B	-1.28B	-3.22B	-2.42B

Costco Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 930.01
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For COST, the sentiment is Negative. The current price of 930.01 is below the 20-day moving average (MA) of 933.78, below the 50-day MA of 952.23, and below the 200-day MA of 970.64, indicating a bearish trend. The MACD of -8.82 indicates Negative momentum. The RSI at 46.90 is Neutral, neither overbought nor oversold. The STOCH value of 67.66 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for COST.

Costco Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
WMT	75 Outperform	$820.41B	38.82	24.46%	0.90%	4.23%	38.05%
TGT	72 Outperform	$40.49B	10.39	26.32%	5.26%	-1.55%	-11.41%
COST	68 Neutral	$405.69B	50.24	30.69%	0.53%	8.17%	9.92%
DG	68 Neutral	$21.61B	18.16	15.60%	2.38%	4.98%	-15.98%
BJ	66 Neutral	$11.75B	20.34	30.84%	―	2.48%	9.41%
Sector *	62 Neutral	$20.33B	14.63	-3.31%	3.23%	1.93%	-12.26%
DLTR	53 Neutral	$18.16B	―	20.07%	―	-29.67%	-178.03%