Costco Wholesale

Costco runs membership-only warehouse stores: shoppers must pay an annual fee to buy there, either a $65 Gold Star membership or a $130 Executive membership that pays back up to 2% of qualifying purchases, capped at $1,250 a year. It operates roughly 900 warehouses worldwide, most of them in the US and Canada, with a smaller and growing footprint in Mexico, Japan, the UK, Korea, Australia, Taiwan, China, and other countries. Inside each warehouse, Costco stocks a limited assortment, often just one or two options per category, and buys in bulk to sell at low markups, betting that low prices keep members coming back and renewing every year. Membership fees are almost pure profit: they now cover roughly half of Costco's total operating income even though merchandise sales make up the vast majority of reported revenue.

Costco also sells gasoline at many locations, and its warehouses often include pharmacies, optical centers, hearing-aid centers, and food courts. Kirkland Signature, its private label, spans food, household goods, electronics, and clothing. E-commerce is still a small share of total sales but is growing much faster than the warehouse business overall.

Costco trades at a premium because its membership model produces unusually predictable, recurring profit. Renewal rates sit near record highs. Membership fee income alone covers roughly half of operating profit. This insulates results from swings in merchandise pricing.

Sales also keep growing quickly, and the board keeps raising the dividend and paying special payouts. Investors are effectively paying for certainty, since the stock trades at a much higher earnings multiple than the broader market. For that premium to be earned, comparable-sales growth and renewal rates need to keep holding up as temporary boosts from gasoline prices and calendar timing fade. Tariff costs also need to stay manageable, since Costco says it is trying to absorb rather than pass on these costs.

Fiscal fourth-quarter results, reported September 24, 2026, showed sales still growing at a double-digit pace and renewal rates still near records. In September 2026 sales, reported October 7, 2026, comparable sales without gasoline and currency effects grew 7.6%. That supports the premium for now. The next test comes with first-quarter fiscal 2027 results, expected around December 2026, once the temporary boost from gasoline prices has likely faded.

If growth cools sharply once those boosts are gone, the premium could fade over the next two to four quarters.

1. Nov 2026 · est.Pending

   October sales report: comparable sales without gasolineUS comparable sales growth excluding gasoline and currency that stays in the mid-single digits or higher passes; a clear slowdown once the gasoline price boost fades fails.
2. Dec 10, 2026 · est.Pending

   Q1 fiscal 2027 earnings: renewals, margins, tariffsWorldwide renewal rate near 90% and membership fee growth with stable gross margin despite tariffs pass; falling renewal rates or a margin squeeze from absorbed tariffs fail.
3. Jan 2027 · est.Pending

   Buyback authorization expires; new capital return decisionA new buyback authorization or a special dividend paid from the net cash passes; no new program while cash keeps building fails.

Every passed and failed checkpoint across all picks

Costco has a net cash balance sheet and uses very little debt. Much of the cash comes from how the business works: accounts payable of $22.6 billion were larger than inventory of $19.3 billion, so suppliers fund the stock on the shelves. Read more

• The stock trades about 23% above the analysts' fair value estimate and near 44 times trailing earnings, versus about 26 times for the S&P 500. This leaves little room for error: any slowdown in sales growth or renewal rates could trigger an outsized decline as the market re-rates the stock.
• US tariff policy has kept shifting through 2026, including a temporary import surcharge that expired in July 2026 and newer duties that replaced it. Costco has said it is trying to absorb rather than fully pass on these costs, which pressures its already thin merchandise margins.
• Membership fees now supply roughly half of Costco's operating income, even though they are a small fraction of reported revenue. A slowdown in membership growth, or weaker renewal rates after a future fee increase, would hit profit disproportionately compared with a dip in merchandise sales alone.
• Recent comparable-sales growth has been boosted by gasoline price inflation (worldwide average fuel prices per gallon were up over 25% year over year in August 2026) and by calendar timing. If gas prices fall back, headline comparable-sales growth could look noticeably weaker even if underlying shopping volume stays healthy.
• Warehouse retail is maturing in Costco's largest market, the US, and competitors including Walmart's Sam's Club and Amazon are investing to take share in bulk buying and membership retail. Continued execution by Costco's leadership, CEO Ron Vachris since January 2024 and CFO Gary Millerchip since March 2024, is needed to keep growing ahead of that competition.
• As a grocery and general-merchandise retailer that sells heavily under its own Kirkland Signature brand, Costco is exposed to product recalls, food-safety incidents, and product-liability claims that could damage trust in that brand.

• October 7, 2026Costco reported September 2026 sales, the first month of fiscal 2027. Net sales for the five weeks ended October 4, 2026, were $30.02 billion, up 13.0%. Total company comparable sales grew 11.4%. Without the effects of gasoline prices and currency, total company comparable sales grew 7.6%, up from 5.4% in August, and US comparable sales grew 8.0%. The later Labor Day added a little more than 0.5 percentage points to September sales. Digitally-enabled sales grew 19.0%.
• September 24, 2026Costco reported Q4 fiscal 2026 and full fiscal-year results. Fourth-quarter net sales were $93.9 billion, up 11.2%, and diluted EPS was $6.75 (including $0.15 from one-time IEEPA tariff refunds), up from $5.87 a year earlier. Full fiscal-year net sales were $297.2 billion, up 10.1%. Membership fee income was $1.85 billion, up 7.3%, with 150.4 million total cardholders and an 89.8% worldwide renewal rate.
• September 17, 2026Costco expanded its partnership with DoorDash to a nationwide U.S. launch, letting members order same-day delivery from any domestic warehouse.