Walmart Inc. ((WMT Quick QuoteWMT - Free Report) ) and Costco Wholesale Corporation ((COST Quick QuoteCOST - Free Report) ) stand as two retail powerhouses that define value-driven shopping across the globe. Walmart, the world’s largest retailer, operates more than 10,750 stores in 19 countries, serving roughly 270 million customers weekly through its vast network of supercenters, discount stores and e-commerce platforms. Its market capitalization sits around $846.5 billion (as of Oct. 29, 2025).

Meanwhile, Costco runs about 914 warehouses worldwide, including 629 in the United States and Puerto Rico, following a membership-based model that emphasizes efficiency, limited selection and bulk-value pricing. The company’s market capitalization stands at about $404.4 billion.

Both giants share a focus on affordability, scale efficiency and customer loyalty but differ in their approach. Walmart thrives on everyday low prices and digital accessibility, while Costco leans on exclusivity and high renewal rates. With inflation pressuring consumer budgets and spending patterns shifting toward essentials, it is a good time to compare how these two retail titans are leveraging their unique operating models to preserve growth, strengthen margins and sustain market dominance.

The Case for Walmart

Walmart’s diverse business model is a major advantage. The company generates growth not only from stores but also through digital advertising, memberships and marketplace operations. These areas provide new profit streams that are less dependent on traditional retail sales. Advertising through Walmart Connect and international platforms like Flipkart Ads is growing quickly, while membership income from Walmart+ and Sam’s Club is rising at a double-digit pace.

Walmart’s progress in digital and logistics capabilities has also been impressive. The company uses its massive store network as fulfillment hubs, allowing it to deliver faster and more efficiently. Marketplace growth and greater use of Walmart Fulfillment Services are strengthening both customer convenience and profitability. Management is also investing heavily in automation and artificial intelligence to improve productivity and simplify shopping experiences. The company’s international operations add another source of growth. Markets like China, Mexico and India (Flipkart) continue to post double-digit gains, driven by strong e-commerce demand and expansion in quick delivery services.

In the second quarter of fiscal 2026, Walmart’s broad strategy delivered solid results. Total revenues rose 5.6% in constant currency or cc, with gains across all major segments. Comparable sales in Walmart U.S. were up 4.6%, supported by grocery strength, mid-teens growth in health & wellness and a rebound in general merchandise. Sam’s Club delivered nearly 6% comp growth, while international sales jumped 10.5%, led by a strong 30% increase in China, and continued progress in Mexico and Flipkart. Digital sales remained a bright spot, growing 25% globally and 26% in Walmart U.S., fueled by faster store-based deliveries.

That said, Walmart absorbed about $450 million in additional liability expenses during the second quarter, while higher wages and technology investments pressured margins. A higher mix of grocery and health & wellness sales (which generally carry lower margins) further constrained profit growth. External factors, including tariffs and currency fluctuations, also add uncertainty to margin protection amid efforts to maintain pricing.

Management expects operating income to rise faster than sales for the full year, backed by cost efficiencies and growth in higher-margin businesses. For fiscal 2026, WMT expects consolidated net sales growth of 3.75-4.75% at cc. Adjusted operating income is expected to increase 3.5-5.5% at cc. Walmart anticipates adjusted earnings per share (EPS) for fiscal 2026 in the $2.52-$2.62 range. The guidance suggests growth from the adjusted EPS of $2.51 recorded in fiscal 2024.

The Case for COST

Costco’s success rests on a strong and steady business model centered around its membership-based structure. High renewal rates — 92.3% in the United States and Canada and 89.8% worldwide — combined with efficient supply chains and bulk purchasing power, allow the company to maintain low prices that keep shoppers coming back. This model has proven durable, helping Costco perform well even in uncertain economic times.

Members pay an annual fee for access to Costco’s warehouses, where they enjoy substantial discounts on a wide range of products. This system not only ensures a steady revenue stream but also creates a sense of value and exclusivity. In the fourth quarter of fiscal 2025, membership fee income increased 14% year over year, supported by fee increases introduced last year in September in the United States and Canada. The company ended the quarter with 81 million paid household members, a 6.3% rise from the previous year.

Costco also keeps evolving to stay relevant with changing consumer habits. It frequently refreshes its assortment to balance staples with unique, in-demand products. Backed by data insights and a customer-focused approach, Costco continues to expand its footprint both in the United States and abroad, with 35 new locations planned for fiscal 2026 (including five relocations).

Digitization remains another focus area. E-commerce performance was strong in the fourth quarter, with comparable sales rising 13.6% year over year. E-commerce site traffic was up 27%, and Costco Logistics deliveries rose 13% in the quarter. Management also highlighted that “digitally enabled” sales (a broader measure that will be reported going forward) totaled more than $27 billion in fiscal 2025. For the five weeks ended Oct. 5, 2025, digitally enabled comparable sales surged 26.1%

However, Costco continues to navigate several near-term headwinds despite its strong operational performance. The company faces ongoing tariff-related cost pressures and low- to mid-single-digit inflation, particularly in commodities like beef, coffee, sugar and corn. Nonetheless, Costco’s disciplined execution and scale advantages continue to serve as key offsets.

How Does the Zacks Consensus Estimate Compare for WMT & COST?

The Zacks Consensus Estimate for Walmart’s current fiscal-year sales and EPS suggests a year-over-year increase of 4.1% and 3.6%, respectively. The consensus estimate for EPS for the current fiscal year has remained unchanged at $2.60 over the past 30 days.

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The Zacks Consensus Estimate for Costco’s current fiscal-year sales and EPS implies year-over-year growth of 7.7% and 11%, respectively. The consensus estimate for EPS for the current fiscal year has increased from $19.85 to $19.97 over the past 30 days.

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WMT & COST: A Look at Past-Year Stock Performance

Over the past year, shares of Walmart have gained 25% compared with Costco’s modest increase of 4.4%. Based on recent performance, Walmart appears to be the stronger pick.

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WMT vs. COST: A Peek Into Stock Valuation

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Walmart’s forward price-to-earnings (P/E) of 36.02 sits above its median of 35.58. Costco is trading at a forward 12-month P/E ratio of 45.01, below its one-year median of 50.39. On valuation grounds, Costco appears more appealing at present. While its forward P/E is higher in absolute terms, it sits below its one-year median, suggesting that the stock is trading at a slight discount to its typical valuation range.

WMT vs. COST: Which Is the Better Bet Now?

Both Walmart and Costco stand out as world-class retailers with resilient models and loyal customer bases. Yet, in today’s inflationary and value-conscious environment, Walmart emerges as the stronger near-term bet. Its diversified revenue streams, strength in groceries and accelerating digital ecosystem offer clearer earnings stability. Costco remains a premier long-term play, but ongoing cost pressures and softer stock momentum may temper its short-term upside. Walmart currently carries a Zacks Rank #2 (Buy), whereas Costco carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.