Costco (COST) AI Stock Analysis

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Costco

(NASDAQ:COST)

Select Model

Neutral 68 (OpenAI - 4o)

Rating:68Neutral

Price Target:

$998.00

▲(9.03% 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 (COST) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$406.57B

Dividend Yield0.54%

Average Volume (3M)2.43M

Price to Earnings (P/E)50.3

Beta (1Y)0.63

Revenue Growth8.17%

EPS Growth9.92%

CountryUS

Employees333,000

SectorConsumer Defensive

Sector Strength42

IndustryDiscount Stores

Share Statistics

EPS (TTM)5.87

Shares Outstanding443,477,080

10 Day Avg. Volume3,252,268

30 Day Avg. Volume2,433,268

Financial Highlights & Ratios

PEG Ratio0.00

Price to Book (P/B)0.00

Price to Sales (P/S)0.00

P/FCF Ratio0.00

Enterprise Value/Market Cap1.01

Enterprise Value/Revenue1.50

Enterprise Value/Gross Profit11.67

Enterprise Value/Ebitda30.78

Forecast

1Y Price Target

$1,089.90

Price Target Upside19.07% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering24

Costco Business Overview & Revenue Model

Company DescriptionCostco 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 MoneyCostco 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 Key Performance Indicators (KPIs)

Any

Memberships

Memberships
Tracks the number of active memberships, highlighting customer loyalty and the potential for recurring revenue through membership fees.

Chart InsightsCostco's membership growth has been robust, with a steady increase over the past five years, reflecting strong customer loyalty and value perception. The latest earnings call highlights a 7.4% rise in membership fee income, underscoring the strategic importance of memberships to Costco's revenue model. With a 93% renewal rate in the US and Canada, and executive memberships contributing significantly to sales, Costco's expansion plans, including 28 new warehouses, are likely to further bolster membership growth despite challenges like foreign exchange and tariff uncertainties.

Data provided by:

Main Street Data

Costco Earnings Call Summary

Earnings Call Date:Sep 25, 2025

(Q4-2025)

% Change Since: |

Next Earnings Date:Dec 11, 2025

Earnings Call Sentiment Positive

Costco's earnings call highlighted strong financial performance with significant growth in net sales and e-commerce. The expansion of warehouses and membership growth were notable positives. However, challenges such as increased SG&A rates, the impact of tariffs, and declining membership renewal rates were areas of concern. Overall, the positive aspects were more significant, indicating a mostly favorable outlook.

Q4-2025 Updates

Positive Updates

Strong Financial Growth

Net sales for fiscal year 2025 reached just under $270 billion, marking an 8% increase from the previous year. E-commerce sales also saw significant growth, exceeding $19.6 billion, an increase of over 15%.

Warehouse Expansion

In Q4, Costco opened 10 new warehouses, contributing to a total of 27 new warehouses for the fiscal year, bringing the worldwide total to 914. Plans for fiscal year 2026 include the opening of another 35 warehouses.

Membership Growth

Membership fee income increased by 14% year over year, with 81 million total paid members, a 6.3% increase versus last year. Executive memberships rose by 9.3%.

E-commerce and Technology Advancements

E-commerce site traffic increased by 27%, with notable growth in categories like gold and jewelry, housewares, and apparel. Enhanced checkout technology was rolled out in all US warehouses to improve the shopping experience.

Negative Updates

SG&A Rate Increase

The SG&A rate for Q4 was higher by 17 basis points year over year, primarily due to investments in employee wages and general liability charges.

Impact of Tariffs

Tariffs have been a challenge, causing Costco to implement various strategies to mitigate potential price increases, including changing item assortments and sourcing.

Membership Renewal Rate Decline

US and Canada renewal rates declined to 92.3%, largely due to a higher number of online sign-ups. This trend is expected to continue, impacting renewal rates in the near future.

Company Guidance

During the Costco Wholesale Corporation Fourth Quarter Fiscal 2025 Earnings Call, key guidance metrics highlighted include a plan to open 35 new warehouses in fiscal year 2026, with five being relocations. For fiscal year 2025, net sales approached $270 billion, marking an over 8% increase from the previous year, while e-commerce sales surpassed $19.6 billion, growing by over 15%. The company reported a net income of $2.61 billion or $5.87 per diluted share, reflecting a 14% growth when excluding a prior year's tax benefit. Comparable sales rose by 5.7%, or 6.4% when adjusted for gas deflation and FX, with e-commerce comparable sales increasing by 13.5% adjusted for FX. Costco's gross margin improved by 13 basis points to 11.13%, thanks to strategic measures like supply chain enhancements and increased Kirkland Signature penetration. The company also saw a 1% boost in weekly US sales due to extended store hours, and membership fee income rose by 14% to $1.72 billion, bolstered by membership upgrades and fee increases. Looking ahead, Costco remains optimistic about expanding its market share despite macroeconomic uncertainties, aiming to maintain its reputation for delivering high-quality items at competitive values.

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

Very Positive

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

Positive

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

Positive

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 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	275.24B	275.24B	254.45B	242.29B	226.95B	195.93B
Gross Profit	35.35B	35.35B	32.09B	29.70B	27.57B	25.25B
EBITDA	13.40B	13.40B	12.15B	11.14B	10.28B	8.92B
Net Income	8.10B	8.10B	7.37B	6.29B	5.84B	5.01B
Balance Sheet
Total Assets	77.10B	77.10B	69.83B	68.99B	64.17B	59.27B
Cash, Cash Equivalents and Short-Term Investments	15.28B	15.28B	11.14B	15.23B	11.05B	12.18B
Total Debt	8.17B	8.17B	8.27B	8.88B	9.04B	10.13B
Total Liabilities	47.94B	47.94B	46.21B	43.94B	43.52B	41.19B
Stockholders Equity	29.16B	29.16B	23.62B	25.06B	20.64B	17.56B
Cash Flow
Free Cash Flow	7.84B	7.84B	6.63B	6.75B	3.50B	5.37B
Operating Cash Flow	13.34B	13.34B	11.34B	11.07B	7.39B	8.96B
Investing Cash Flow	-5.31B	-5.31B	-4.41B	-4.97B	-3.92B	-3.54B
Financing Cash Flow	-3.77B	-3.77B	-10.76B	-2.61B	-4.28B	-6.49B

Costco Technical Analysis

Technical Analysis Sentiment

Negative

Last Price915.38

Price Trends

50DMA

953.26

Negative

100DMA

973.10

Negative

200DMA

971.72

Negative

Market Momentum

MACD

-11.62

Positive

RSI

35.04

Neutral

STOCH

25.57

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 915.38 is below the 20-day moving average (MA) of 945.09, below the 50-day MA of 953.26, and below the 200-day MA of 971.72, indicating a bearish trend. The MACD of -11.62 indicates Positive momentum. The RSI at 35.04 is Neutral, neither overbought nor oversold. The STOCH value of 25.57 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for COST.

Costco Risk Analysis

Costco disclosed 26 risk factors in its most recent earnings report. Costco reported the most risks in the "Macro & Political" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Costco Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
WMT	75 Outperform	$810.84B	38.37	24.46%	0.89%	4.23%	38.05%
TGT	72 Outperform	$40.67B	10.43	26.32%	5.05%	-1.55%	-11.41%
COST	68 Neutral	$406.57B	50.34	30.69%	0.54%	8.17%	9.92%
DG	68 Neutral	$21.94B	18.44	15.60%	2.36%	4.98%	-15.98%
BJ	66 Neutral	$12.21B	21.29	30.84%	―	2.48%	9.41%
Sector *	62 Neutral	$20.33B	14.63	-3.31%	3.23%	1.93%	-12.26%
DLTR	53 Neutral	$18.35B	―	20.07%	―	-29.67%	-178.03%

* Consumer Defensive Sector Average

Performance Comparison

COST

Costco

915.38

46.25

5.32%

Dollar General

100.21

18.10

22.04%

DLTR

Dollar Tree

89.98

20.52

29.54%

TGT

Target

89.03

-54.43

-37.94%

WMT

Walmart

102.07

23.73

30.29%

Bj's Wholesale Club Holdings

92.70

5.59

6.42%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Sep 29, 2025