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Costco vs. Walmart: Which Retail Stock Should You Buy Now?
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Key Takeaways
Investors weigh Costco's membership strength against Walmarts scale and omnichannel reach.
Costco posts rising membership income, e-commerce growth and international expansion plans.
Walmart gains from e-commerce, advertising and international growth, boosting stability and margins.
As investors evaluate which retail stock to buy now, Costco Wholesale Corporation (COST - Free Report) and Walmart Inc. (WMT - Free Report) remain at the center of the discussion. Costco commands a market capitalization of about $434.3 billion and thrives on a membership-based warehouse model that delivers value through bulk sales at discounted prices. With 910 warehouses worldwide, including 626 in the United States and Puerto Rico, the company leverages scale and customer loyalty to sustain growth.
Walmart, valued at roughly $803.6 billion, stands as the world’s largest retailer with more than 10,750 stores across 19 countries. Its low-price strategy, combined with a growing e-commerce and delivery ecosystem, positions Walmart as a one-stop destination for both groceries and general merchandise.
For investors comparing both the stocks, the decision comes down to weighing Costco’s membership strength against Walmart’s unmatched scale and omnichannel reach. Both have shown resilience in changing economic conditions.
The Case for Costco
Costco's membership-based business model is the key to its growth. The company maintains high customer loyalty, with membership renewal rates of 92.7% in the United States and Canada and 90.2% globally. This, along with its efficient supply chain and ability to buy in bulk, allows Costco to offer low prices that keep customers coming back. This strong model has enabled Costco to succeed, even when the economy struggles.
Members pay an annual fee to shop at Costco, where they receive significant discounts on a variety of products. This membership model provides Costco with a stable revenue stream and fosters a sense of value and exclusivity among consumers. In the third quarter of fiscal 2025, membership fee income rose 10.4% from the year-ago period. This growth was boosted by a fee increase, which accounted for a 4.6% rise in the quarter. By the end of the quarter, Costco had 79.6 million paid household members, reflecting an increase of 6.8% year over year.
Costco continuously adapts to market trends and consumer preferences. The company regularly updates its product offerings to include a mix of everyday essentials and unique, high-demand items. Through market analysis and tailored offerings, Costco has expanded its presence, both domestically and internationally. In fiscal 2025, the company plans to open 27 total openings (24 net new), bringing its global warehouse count to 914.
Digitization also plays a key role in Costco’s expansion. E-commerce comparable sales rose 14.8% in the third quarter, reflecting growing online demand. Costco Logistics saw a 31% increase in items delivered, driven by the success of big-ticket product categories. To make shopping more convenient for members, Costco recently partnered with Affirm to offer a Buy Now, Pay Later program. This initiative seems to be working, with e-commerce sales jumping 15.1% in the four weeks ended Aug. 3, 2025.
That said, some challenges linger. Currency headwinds and potential tariffs on key imports could pressure margins. Additionally, as consumers become more cautious with spending, demand for non-essential items has softened — a potential drag on discretionary sales.
The Case for Walmart
Walmart’s solid position in the retail industry makes it a compelling case for investors seeking both stability and growth. The company’s ability to generate sales momentum across its core segments while adapting to changing market conditions underscores its resilience. Comparable sales growth seen in Walmart U.S. and Sam’s Club reflects broad-based demand strength. The market share expansion in essential categories like grocery and health & wellness has been achieved even in a complex macroeconomic environment, positioning Walmart as a reliable performer in uncertain times.
A major catalyst for future profitability is Walmart’s e-commerce. Worldwide e-commerce sales grew 22% in the first quarter of fiscal 2026, fueled by marketplace expansion, store-fulfilled pickup and delivery, and improved last-mile economics. Enhanced delivery capabilities, such as aiming to reach 95% of the U.S. population within three hours or less, solidify Walmart’s competitive edge in convenience and service.
High-margin revenue streams have also been expanding rapidly, strengthening Walmart’s profit base. Membership income has been robust, with strong renewal rates and premium tier adoption in Walmart+ and Sam’s Club. The advertising business, bolstered by Walmart Connect in the United States and platforms like Flipkart internationally, has scaled at an impressive pace. These businesses not only diversify revenue sources but also enhance margin resilience, making Walmart less dependent on traditional retail sales alone.
International markets have added another dimension to Walmart’s growth story. Strong performances in China, Flipkart and Walmex in the recent past highlight the company’s ability to tap into high-potential regions and diversify geographic risk. Alongside disciplined inventory management and strategic capital returns, Walmart’s healthy balance sheet enables it to invest in future growth while rewarding shareholders.
However, Walmart faces challenges, including tariff-related cost pressures that may impact demand, especially in price-sensitive categories. Also, rising operating expenses and currency headwinds add further pressure.
COST vs. WMT: How Do Estimates Stack Up?
The Zacks Consensus Estimate for Costco’s current fiscal-year sales and EPS implies year-over-year growth of 8.1% and 11.6%, respectively. The consensus estimate for EPS for the current fiscal year has fallen by 9 cents to $17.97 over the past 60 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Walmart’s current fiscal-year sales and EPS suggests a year-over-year increase of 3.5% and 3.6%, respectively. The consensus estimate for EPS for the current fiscal year has risen by a penny to $2.60 over the past 60 days.
Image Source: Zacks Investment Research
COST vs. WMT: A Look at Past-Year Stock Performance
Over the past year, shares of Costco have gained 11.8%, while Walmart has surged 35.1%. Currently, Costco trades 9.2% below its 52-week high compared with Walmart, which sits 4.4% off its peak. For now, investor sentiment leans more toward Walmart.
Image Source: Zacks Investment Research
COST vs. WMT: A Peek Into Stock Valuation
Costco is trading at a forward 12-month price-to-earnings (P/E) ratio of 49.32, below its one-year median of 50.76. In contrast, Walmart’s forward P/E of 36.36 sits modestly above its median of 34.67. Despite the relative easing in Costco’s valuation multiple, it remains far more expensive than Walmart. On valuation grounds, Walmart looks like an attractive bet.
Image Source: Zacks Investment Research
Costco vs. Walmart: Which Stock Has the Edge?
Both Costco and Walmart remain dominant forces in the retail industry. Costco benefits from its membership model and loyal customer base, while Walmart leverages unmatched global scale, diversified revenue streams, and rapidly expanding e-commerce and advertising platforms. That said, Costco’s premium valuation limits near-term upside. On the contrary, Walmart offers steady growth drivers at a more reasonable multiple, making it the stronger and more resilient choice for investors today. Walmart currently carries a Zacks Rank #2 (Buy), while Costco currently has a Zacks Rank #4 (Sell).
Image: Bigstock
Costco vs. Walmart: Which Retail Stock Should You Buy Now?
Key Takeaways
As investors evaluate which retail stock to buy now, Costco Wholesale Corporation (COST - Free Report) and Walmart Inc. (WMT - Free Report) remain at the center of the discussion. Costco commands a market capitalization of about $434.3 billion and thrives on a membership-based warehouse model that delivers value through bulk sales at discounted prices. With 910 warehouses worldwide, including 626 in the United States and Puerto Rico, the company leverages scale and customer loyalty to sustain growth.
Walmart, valued at roughly $803.6 billion, stands as the world’s largest retailer with more than 10,750 stores across 19 countries. Its low-price strategy, combined with a growing e-commerce and delivery ecosystem, positions Walmart as a one-stop destination for both groceries and general merchandise.
For investors comparing both the stocks, the decision comes down to weighing Costco’s membership strength against Walmart’s unmatched scale and omnichannel reach. Both have shown resilience in changing economic conditions.
The Case for Costco
Costco's membership-based business model is the key to its growth. The company maintains high customer loyalty, with membership renewal rates of 92.7% in the United States and Canada and 90.2% globally. This, along with its efficient supply chain and ability to buy in bulk, allows Costco to offer low prices that keep customers coming back. This strong model has enabled Costco to succeed, even when the economy struggles.
Members pay an annual fee to shop at Costco, where they receive significant discounts on a variety of products. This membership model provides Costco with a stable revenue stream and fosters a sense of value and exclusivity among consumers. In the third quarter of fiscal 2025, membership fee income rose 10.4% from the year-ago period. This growth was boosted by a fee increase, which accounted for a 4.6% rise in the quarter. By the end of the quarter, Costco had 79.6 million paid household members, reflecting an increase of 6.8% year over year.
Costco continuously adapts to market trends and consumer preferences. The company regularly updates its product offerings to include a mix of everyday essentials and unique, high-demand items. Through market analysis and tailored offerings, Costco has expanded its presence, both domestically and internationally. In fiscal 2025, the company plans to open 27 total openings (24 net new), bringing its global warehouse count to 914.
Digitization also plays a key role in Costco’s expansion. E-commerce comparable sales rose 14.8% in the third quarter, reflecting growing online demand. Costco Logistics saw a 31% increase in items delivered, driven by the success of big-ticket product categories. To make shopping more convenient for members, Costco recently partnered with Affirm to offer a Buy Now, Pay Later program. This initiative seems to be working, with e-commerce sales jumping 15.1% in the four weeks ended Aug. 3, 2025.
That said, some challenges linger. Currency headwinds and potential tariffs on key imports could pressure margins. Additionally, as consumers become more cautious with spending, demand for non-essential items has softened — a potential drag on discretionary sales.
The Case for Walmart
Walmart’s solid position in the retail industry makes it a compelling case for investors seeking both stability and growth. The company’s ability to generate sales momentum across its core segments while adapting to changing market conditions underscores its resilience. Comparable sales growth seen in Walmart U.S. and Sam’s Club reflects broad-based demand strength. The market share expansion in essential categories like grocery and health & wellness has been achieved even in a complex macroeconomic environment, positioning Walmart as a reliable performer in uncertain times.
A major catalyst for future profitability is Walmart’s e-commerce. Worldwide e-commerce sales grew 22% in the first quarter of fiscal 2026, fueled by marketplace expansion, store-fulfilled pickup and delivery, and improved last-mile economics. Enhanced delivery capabilities, such as aiming to reach 95% of the U.S. population within three hours or less, solidify Walmart’s competitive edge in convenience and service.
High-margin revenue streams have also been expanding rapidly, strengthening Walmart’s profit base. Membership income has been robust, with strong renewal rates and premium tier adoption in Walmart+ and Sam’s Club. The advertising business, bolstered by Walmart Connect in the United States and platforms like Flipkart internationally, has scaled at an impressive pace. These businesses not only diversify revenue sources but also enhance margin resilience, making Walmart less dependent on traditional retail sales alone.
International markets have added another dimension to Walmart’s growth story. Strong performances in China, Flipkart and Walmex in the recent past highlight the company’s ability to tap into high-potential regions and diversify geographic risk. Alongside disciplined inventory management and strategic capital returns, Walmart’s healthy balance sheet enables it to invest in future growth while rewarding shareholders.
However, Walmart faces challenges, including tariff-related cost pressures that may impact demand, especially in price-sensitive categories. Also, rising operating expenses and currency headwinds add further pressure.
COST vs. WMT: How Do Estimates Stack Up?
The Zacks Consensus Estimate for Costco’s current fiscal-year sales and EPS implies year-over-year growth of 8.1% and 11.6%, respectively. The consensus estimate for EPS for the current fiscal year has fallen by 9 cents to $17.97 over the past 60 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Walmart’s current fiscal-year sales and EPS suggests a year-over-year increase of 3.5% and 3.6%, respectively. The consensus estimate for EPS for the current fiscal year has risen by a penny to $2.60 over the past 60 days.
Image Source: Zacks Investment Research
COST vs. WMT: A Look at Past-Year Stock Performance
Over the past year, shares of Costco have gained 11.8%, while Walmart has surged 35.1%. Currently, Costco trades 9.2% below its 52-week high compared with Walmart, which sits 4.4% off its peak. For now, investor sentiment leans more toward Walmart.
Image Source: Zacks Investment Research
COST vs. WMT: A Peek Into Stock Valuation
Costco is trading at a forward 12-month price-to-earnings (P/E) ratio of 49.32, below its one-year median of 50.76. In contrast, Walmart’s forward P/E of 36.36 sits modestly above its median of 34.67. Despite the relative easing in Costco’s valuation multiple, it remains far more expensive than Walmart. On valuation grounds, Walmart looks like an attractive bet.
Image Source: Zacks Investment Research
Costco vs. Walmart: Which Stock Has the Edge?
Both Costco and Walmart remain dominant forces in the retail industry. Costco benefits from its membership model and loyal customer base, while Walmart leverages unmatched global scale, diversified revenue streams, and rapidly expanding e-commerce and advertising platforms. That said, Costco’s premium valuation limits near-term upside. On the contrary, Walmart offers steady growth drivers at a more reasonable multiple, making it the stronger and more resilient choice for investors today. Walmart currently carries a Zacks Rank #2 (Buy), while Costco currently has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.