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WMT or COST: Which Retail Giant Looks More Attractive Now?
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Walmart Inc. (WMT - Free Report) and Costco Wholesale Corporation (COST - Free Report) are two of the largest U.S. retail companies, both built around value, scale and recurring customer traffic.
Walmart, with a market cap of $1.06 trillion, operates a broad global omnichannel model across supercenters, grocery, e-commerce, marketplace, advertising and memberships. Costco, valued at $461.95 billion, follows a membership-based warehouse club model, supported by strong renewal rates, high-volume purchasing and a limited-SKU strategy that helps keep prices low.
The comparison is especially relevant as Walmart is set to report on May 21, followed by Costco on May 28. Both retailers continue to benefit from resilient grocery demand, value-seeking consumers and rising digital engagement, but their growth models differ meaningfully. Investors will be watching whether Walmart’s wider omnichannel ecosystem and higher-margin growth areas, such as advertising and marketplace, can outperform Costco’s loyal membership base, traffic strength and disciplined merchandising model.
The Case for WMT
Walmart continues to strengthen its position as the world’s leading retailer through consistent execution across its omnichannel ecosystem, disciplined inventory management and expanding higher-margin businesses.
Walmart delivered fourth-quarter fiscal 2026 revenue growth of 5.6%, while adjusted operating income rose 10.5%, driven by expense leverage and improving e-commerce economics. Global e-commerce sales grew 24%, supported by marketplace, store-fulfilled delivery and advertising strength. Walmart Connect sales in the United States jumped 41%, and membership income grew in the double digits, underscoring diversification beyond traditional retail.
Scale and operational efficiency remain key strengths. Walmart generated more than $41 billion in operating cash flow in fiscal 2026 and continues investing in automation, AI and supply-chain upgrades to boost productivity and delivery speed. About 50% of e-commerce fulfillment center volume is now automated, while faster delivery adoption and early traction for its AI shopping assistant, Sparky, point to further digital monetization potential.
Walmart is also benefiting from resilient grocery demand and steady market share gains across income groups, including higher-income households. Its value-focused positioning remains attractive amid persistent macroeconomic uncertainty and inflationary pressures. Meanwhile, international operations and advertising businesses are contributing meaningfully to profit growth.
The company still faces certain challenges, including tariff-related cost pressures, cautious consumer spending among lower-income households and continued investments that may weigh on near-term margins. However, Walmart’s broad scale, strong balance sheet, expanding digital ecosystem and growing contribution from higher-margin businesses position it well for sustained long-term growth.
The Case for COST
Costco continues to demonstrate the strength of its membership-driven warehouse retail model through solid sales growth, resilient customer traffic and disciplined operational execution.
In second-quarter fiscal 2026, Costco reported 9.1% net sales growth and a 7.4% increase in comparable sales. Digitally enabled comparable sales rose 22.6%, reflecting strong e-commerce momentum, while membership fee income grew 13.6%. April trends remained strong, with total comparable sales up 11.6% and digitally enabled comparable sales rising 18.8%.
Costco’s business model remains differentiated due to its limited-SKU strategy, high inventory turnover and strong pricing discipline. The company continues to attract value-conscious consumers through competitive pricing and private-label offerings under the Kirkland Signature brand. Management also emphasized efforts to lower prices in select categories where commodity costs have eased, reinforcing customer loyalty and traffic growth.
The company is strengthening long-term growth drivers through warehouse expansion, digital enhancements and operational efficiencies. Costco plans to accelerate warehouse openings, while investing in personalized digital experiences, automated checkout systems and supply-chain capabilities. Its financial position also remains strong, enabling the company to recently raise its quarterly dividend 13%, reflecting confidence in cash flow generation and long-term fundamentals.
While Costco continues to operate from a position of strength, the company still faces certain headwinds, including tariff-related uncertainty, foreign exchange fluctuations and higher operating costs associated with wages and ongoing expansion initiatives. However, Costco’s recurring membership income, loyal customer base, strong balance sheet and consistent execution continue to support its long-term growth outlook and profitability trajectory.
Earnings Estimate Trends Favor Both WMT & COST
For Walmart, the Zacks Consensus Estimate for the current and next fiscal-year earnings per share (EPS) has been unchanged at $2.89 and $3.25, respectively, over the past 30 days. The estimates imply year-over-year growth of 9.5% and 12.4%, respectively.
Image Source: Zacks Investment Research
Over the past 30 days, the Zacks Consensus Estimate for Costco’s current fiscal year EPS has been unchanged at $20.32, while the consensus mark for the next fiscal year has risen 0.3% to $22.39, respectively. These estimates indicate year-over-year growth rates of 13% and 10.2%, respectively.
Image Source: Zacks Investment Research
The consensus estimate suggests analysts remain constructive on both retailers’ earnings prospects, supported by resilient consumer demand, digital momentum and disciplined execution.
WMT & COST: How Have the Stocks Performed?
Over the past year, Walmart’s shares have jumped 34.8%, significantly outperforming the Zacks Retail – Wholesale sector’s 10.6% return. In comparison, Costco’s stock has gained a modest 1.5%, trailing both Walmart and the broader sector during the same period.
Image Source: Zacks Investment Research
WMT vs. COST: A Peek Into Stock Valuation
Both Walmart and Costco trade at premium valuations, reflecting confidence in their resilient business models and steady earnings prospects. Walmart’s forward P/E of 44.28 is well above its one-year median of 37.65, suggesting rising investor optimism around its e-commerce, advertising and efficiency initiatives. Costco’s forward P/E of 47.82 is only slightly above its one-year median of 46.88, indicating its strong membership model and consistent execution are already largely priced in.
Image Source: Zacks Investment Research
Image Source: Zacks Investment Research
WMT vs. COST: Which Retail Giant Has the Edge?
Both Walmart and Costco remain fundamentally strong retailers, but WMT appears better positioned. Its broader omnichannel ecosystem, improving e-commerce economics, growing advertising and marketplace businesses, and stronger stock momentum give it an edge. Costco’s membership model, traffic strength and disciplined execution remain impressive, but much of that consistency appears reflected in its valuation.
Overall, Walmart looks like the better bet now, offering a stronger mix of growth, diversification and operating leverage.
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Image: Bigstock
WMT or COST: Which Retail Giant Looks More Attractive Now?
Walmart Inc. (WMT - Free Report) and Costco Wholesale Corporation (COST - Free Report) are two of the largest U.S. retail companies, both built around value, scale and recurring customer traffic.
Walmart, with a market cap of $1.06 trillion, operates a broad global omnichannel model across supercenters, grocery, e-commerce, marketplace, advertising and memberships. Costco, valued at $461.95 billion, follows a membership-based warehouse club model, supported by strong renewal rates, high-volume purchasing and a limited-SKU strategy that helps keep prices low.
The comparison is especially relevant as Walmart is set to report on May 21, followed by Costco on May 28. Both retailers continue to benefit from resilient grocery demand, value-seeking consumers and rising digital engagement, but their growth models differ meaningfully. Investors will be watching whether Walmart’s wider omnichannel ecosystem and higher-margin growth areas, such as advertising and marketplace, can outperform Costco’s loyal membership base, traffic strength and disciplined merchandising model.
The Case for WMT
Walmart continues to strengthen its position as the world’s leading retailer through consistent execution across its omnichannel ecosystem, disciplined inventory management and expanding higher-margin businesses.
Walmart delivered fourth-quarter fiscal 2026 revenue growth of 5.6%, while adjusted operating income rose 10.5%, driven by expense leverage and improving e-commerce economics. Global e-commerce sales grew 24%, supported by marketplace, store-fulfilled delivery and advertising strength. Walmart Connect sales in the United States jumped 41%, and membership income grew in the double digits, underscoring diversification beyond traditional retail.
Scale and operational efficiency remain key strengths. Walmart generated more than $41 billion in operating cash flow in fiscal 2026 and continues investing in automation, AI and supply-chain upgrades to boost productivity and delivery speed. About 50% of e-commerce fulfillment center volume is now automated, while faster delivery adoption and early traction for its AI shopping assistant, Sparky, point to further digital monetization potential.
Walmart is also benefiting from resilient grocery demand and steady market share gains across income groups, including higher-income households. Its value-focused positioning remains attractive amid persistent macroeconomic uncertainty and inflationary pressures. Meanwhile, international operations and advertising businesses are contributing meaningfully to profit growth.
The company still faces certain challenges, including tariff-related cost pressures, cautious consumer spending among lower-income households and continued investments that may weigh on near-term margins. However, Walmart’s broad scale, strong balance sheet, expanding digital ecosystem and growing contribution from higher-margin businesses position it well for sustained long-term growth.
The Case for COST
Costco continues to demonstrate the strength of its membership-driven warehouse retail model through solid sales growth, resilient customer traffic and disciplined operational execution.
In second-quarter fiscal 2026, Costco reported 9.1% net sales growth and a 7.4% increase in comparable sales. Digitally enabled comparable sales rose 22.6%, reflecting strong e-commerce momentum, while membership fee income grew 13.6%. April trends remained strong, with total comparable sales up 11.6% and digitally enabled comparable sales rising 18.8%.
Costco’s business model remains differentiated due to its limited-SKU strategy, high inventory turnover and strong pricing discipline. The company continues to attract value-conscious consumers through competitive pricing and private-label offerings under the Kirkland Signature brand. Management also emphasized efforts to lower prices in select categories where commodity costs have eased, reinforcing customer loyalty and traffic growth.
The company is strengthening long-term growth drivers through warehouse expansion, digital enhancements and operational efficiencies. Costco plans to accelerate warehouse openings, while investing in personalized digital experiences, automated checkout systems and supply-chain capabilities. Its financial position also remains strong, enabling the company to recently raise its quarterly dividend 13%, reflecting confidence in cash flow generation and long-term fundamentals.
While Costco continues to operate from a position of strength, the company still faces certain headwinds, including tariff-related uncertainty, foreign exchange fluctuations and higher operating costs associated with wages and ongoing expansion initiatives. However, Costco’s recurring membership income, loyal customer base, strong balance sheet and consistent execution continue to support its long-term growth outlook and profitability trajectory.
Earnings Estimate Trends Favor Both WMT & COST
For Walmart, the Zacks Consensus Estimate for the current and next fiscal-year earnings per share (EPS) has been unchanged at $2.89 and $3.25, respectively, over the past 30 days. The estimates imply year-over-year growth of 9.5% and 12.4%, respectively.
Image Source: Zacks Investment Research
Over the past 30 days, the Zacks Consensus Estimate for Costco’s current fiscal year EPS has been unchanged at $20.32, while the consensus mark for the next fiscal year has risen 0.3% to $22.39, respectively. These estimates indicate year-over-year growth rates of 13% and 10.2%, respectively.
Image Source: Zacks Investment Research
The consensus estimate suggests analysts remain constructive on both retailers’ earnings prospects, supported by resilient consumer demand, digital momentum and disciplined execution.
WMT & COST: How Have the Stocks Performed?
Over the past year, Walmart’s shares have jumped 34.8%, significantly outperforming the Zacks Retail – Wholesale sector’s 10.6% return. In comparison, Costco’s stock has gained a modest 1.5%, trailing both Walmart and the broader sector during the same period.
Image Source: Zacks Investment Research
WMT vs. COST: A Peek Into Stock Valuation
Both Walmart and Costco trade at premium valuations, reflecting confidence in their resilient business models and steady earnings prospects. Walmart’s forward P/E of 44.28 is well above its one-year median of 37.65, suggesting rising investor optimism around its e-commerce, advertising and efficiency initiatives. Costco’s forward P/E of 47.82 is only slightly above its one-year median of 46.88, indicating its strong membership model and consistent execution are already largely priced in.
Image Source: Zacks Investment Research
Image Source: Zacks Investment Research
WMT vs. COST: Which Retail Giant Has the Edge?
Both Walmart and Costco remain fundamentally strong retailers, but WMT appears better positioned. Its broader omnichannel ecosystem, improving e-commerce economics, growing advertising and marketplace businesses, and stronger stock momentum give it an edge. Costco’s membership model, traffic strength and disciplined execution remain impressive, but much of that consistency appears reflected in its valuation.
Overall, Walmart looks like the better bet now, offering a stronger mix of growth, diversification and operating leverage.
Both Walmart and Costco currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.