Costco Wholesale Corporation’s (COST Quick QuoteCOST - Free Report) March sales figures shed light on the retail giant's performance. Known for its consistent strength in the warehouse club space, Costco continues to attract long-term investors. That said, the latest data may significantly influence the stock's near-term direction. Here's a closer look at the numbers to assess whether Costco stock is a buy, hold or sell following this update.

A Sneak Peek Into Costco’s March Sales Figures

Costco's membership-driven model remains a key driver, with high renewal rates providing a reliable revenue stream. Its efficient supply chain and bulk purchasing power support competitive pricing and market position. The combination of strong customer loyalty and operational efficiency helps Costco maintain an edge in the competitive retail landscape.

For the five weeks ended April 6, 2025, comparable sales in the United States, Canada and Other International markets grew 7.5%, 4.1% and 2.9%, respectively. Total company comparable sales rose 6.4%. This followed increases of 6.5% and 7.5% in February and January, respectively. (Read: Costco Delivers Impressive March Comparable Sales Performance)

Thanks to the calendar shift of Easter, March included an extra shopping day compared to the same month last year, contributing roughly one and one-half percent to both total and comparable sales.

As a result, Costco's net sales for March increased 8.6% to $25.51 billion, up from $23.48 billion in the same period last year. This follows a sales improvement of 8.8% and 9.2% reported in February and January, respectively, reflecting a strong and consistent sales performance in the past few months.

Costco Fundamentally a Strong Investment Choice

Costco continues to impress with its stellar revenue performance, showcasing its ability to navigate through shifting economic dynamics. The consistent growth in membership fee income and high renewal rates, surpassing 90% in key markets like the United States and Canada, highlight Costco's effective customer retention strategies. 

With a substantial base of paid household members and increasing executive memberships, Costco ensures a steady flow of high-margin recurring revenues. The warehouse operator ended the second quarter of fiscal 2025 with 78.4 million paid household members, up 6.8% from the prior year. Executive memberships, a more profitable category for Costco, grew 9.1% year over year to reach 36.9 million, now accounting for 47.1% of all paid members and driving 73.8% of worldwide sales. Membership fee income rose 7.4% year over year. 

Costco has demonstrated strong comparable sales growth, driven by solid performances in both physical and digital platforms. With plans for significant new openings domestically and internationally, Costco is poised to capture new markets and strengthen its competitive position in the retail landscape.

Costco’s disciplined approach to cost control, product mix optimization and increasing penetration of its private-label brand, Kirkland Signature, have contributed to margin improvement. The company's ability to leverage economies of scale and growing digital commerce initiatives further enhances profitability. These operational efficiencies, alongside a strong balance sheet, provide a solid foundation for growth. With cash and cash equivalents (including short-term investments of $802 million) of $13,158 million at the end of the second quarter, Costco looks quite comfortable from the liquidity point of view.

Valuation Analysis: Is Costco’s Premium Price Justified?

Costco stock has been a standout performer, with shares rallying 34.1% over the past year, outpacing the industry's rise of 16.5%. This impressive growth underscores investor confidence in Costco’s business model.

Costco has even outperformed its peers, such as Dollar General Corporation (DG Quick QuoteDG - Free Report) , Dollar Tree, Inc. (DLTR Quick QuoteDLTR - Free Report) and Target Corporation (TGT Quick QuoteTGT - Free Report) . Shares of Dollar General, Dollar Tree and Target have declined 38.5%, 42.5% and 43.8%, respectively, in the past year.
 

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However, Costco is trading at a significant premium to its industry peers. Costco's forward 12-month price-to-earnings ratio stands at 50.53, higher than the industry’s ratio of 31.38 and the S&P 500's ratio of 19.72. The stock is also trading above its median P/E level of 49.70, observed over the past year. 

Costco is trading at a premium to Dollar General (with a forward 12-month P/E ratio of 15.70), Dollar Tree (13.51) and Target (10.17).
 

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Now, the question that arises is whether Costco’s current price is warranted or overvalued in today’s market.

Costco’s premium valuation reflects investor confidence in the company’s ability to deliver consistent growth and maintain its competitive advantage. While the stock’s current price may seem high, its robust business model, strong customer base and reliable revenue streams justify the premium.

How Consensus Estimates Stack Up for Costco

The Zacks Consensus Estimate for earnings per share has seen upward revisions. Over the past seven days, the consensus estimate has risen by a penny to $17.95 for the current fiscal and by a couple of cents to $19.75 for the next fiscal. These estimates indicate year-over-year growth rates of 11.4% and 10%, respectively.
 

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Should You Invest in Costco Now or Wait for a Pullback?

Costco's March sales results reaffirm its position as a dependable stock in the retail sector, backed by strong membership growth, consistent comparable sales improvement and solid financial fundamentals. While the stock trades at a premium valuation, this appears justified given its operational resilience, expanding global footprint and loyal customer base. For long-term investors willing to pay up for quality and stability, Costco remains a compelling choice. However, for value-conscious buyers, the elevated valuation may warrant patience for a more attractive entry point. Costco currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.