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Costco's Growing Traffic Shows the Power of Its Value Strategy
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Key Takeaways
Costco's third-quarter traffic rose 2.4%, helping comparable sales climb 9.8% year over year.
Technology upgrades, remodeling and expansion improved convenience and supported more warehouse visits.
Record fuel volumes brought some members to Costco gas, linking gas trips to stronger warehouse engagement.
A standout element of Costco Wholesale Corporation’s (COST - Free Report) third-quarter fiscal 2026 performance was the company’s ability to drive more customer visits, reinforcing the strength of its membership ecosystem and everyday value proposition.
Comparable traffic increased 2.4% year over year, marking another period of positive shopping-frequency growth. While comparable ticket growth remained strong, up 7.3%, management emphasized that traffic trends remain an important measure of member engagement and overall business health. As a result, comparable sales rose 9.8%.
Regional results showed encouraging momentum. Traffic jumped 1.8% in the United States, 4.4% in Canada and 2.9% across Other International markets. These gains helped support companywide comparable sales growth and reflected broad participation from members across geographies.
Management cited several factors supporting visitation trends. Technology upgrades have improved checkout speed, helping warehouses handle larger shopper volumes more efficiently. The rollout of digital tools, combined with investments in warehouse remodeling and expansion, aims to increase convenience and reduce friction in the shopping experience.
Costco also highlighted the role of gas stations in strengthening member relationships. Record fuel volumes during the quarter introduced some members to Costco’s gas offering for the first time. Management noted that members who purchase gas typically visit warehouses more frequently and exhibit stronger engagement overall.
The quarter’s traffic growth demonstrates that Costco continues to attract repeat visits from members, reflecting the effectiveness of its efforts to enhance convenience, improve value and deepen customer engagement.
How Costco Compares With Walmart and Target
Walmart Inc. (WMT - Free Report) posted U.S. comparable sales growth of 4.1% in the first quarter of fiscal 2027, driven by higher customer transactions, increased unit volumes and strong e-commerce performance. Walmart continued to gain market share across income groups while benefiting from growth in advertising, marketplace sales and Walmart+ membership revenues. Walmart’s results reflected steady demand for both grocery and general merchandise offerings.
Meanwhile, Target Corporation (TGT - Free Report) delivered comparable sales growth of 5.6% in the first quarter of fiscal 2026, supported by a 4.4% increase in traffic and strength across both stores and digital channels. Target reported sales growth in all six core merchandise categories, with broad-based demand across guest demographics. Target also highlighted momentum in beauty, food and wellness categories. As Target executes its merchandising and store experience initiatives, the retailer remains focused on driving sustainable long-term growth.
What the Latest Metrics Say About Costco
Costco has seen its shares tumble 1.7% over the past three months against the industry’s growth of 3.5%.
Image Source: Zacks Investment Research
From a valuation standpoint, Costco's forward 12-month price-to-earnings ratio stands at 44.47, higher than the industry’s ratio of 32.24. However, it is trading below its 12-month median level of 46.27, indicating some moderation in valuation despite sustained investor confidence in the stock.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Costco’s current financial-year sales and earnings per share implies year-over-year growth of 9.4% and 13.3%, respectively. For the next fiscal year, the consensus estimate indicates a 7.8% rise in sales and 10.2% growth in earnings.
The consensus estimate for earnings per share for the current and next fiscal year has increased by 7 cents and 8 cents to $20.38 and $22.46, respectively.
View the Zacks #1 Rank List
Image: Bigstock
Costco's Growing Traffic Shows the Power of Its Value Strategy
Key Takeaways
A standout element of Costco Wholesale Corporation’s (COST - Free Report) third-quarter fiscal 2026 performance was the company’s ability to drive more customer visits, reinforcing the strength of its membership ecosystem and everyday value proposition.
Comparable traffic increased 2.4% year over year, marking another period of positive shopping-frequency growth. While comparable ticket growth remained strong, up 7.3%, management emphasized that traffic trends remain an important measure of member engagement and overall business health. As a result, comparable sales rose 9.8%.
Regional results showed encouraging momentum. Traffic jumped 1.8% in the United States, 4.4% in Canada and 2.9% across Other International markets. These gains helped support companywide comparable sales growth and reflected broad participation from members across geographies.
Management cited several factors supporting visitation trends. Technology upgrades have improved checkout speed, helping warehouses handle larger shopper volumes more efficiently. The rollout of digital tools, combined with investments in warehouse remodeling and expansion, aims to increase convenience and reduce friction in the shopping experience.
Costco also highlighted the role of gas stations in strengthening member relationships. Record fuel volumes during the quarter introduced some members to Costco’s gas offering for the first time. Management noted that members who purchase gas typically visit warehouses more frequently and exhibit stronger engagement overall.
The quarter’s traffic growth demonstrates that Costco continues to attract repeat visits from members, reflecting the effectiveness of its efforts to enhance convenience, improve value and deepen customer engagement.
How Costco Compares With Walmart and Target
Walmart Inc. (WMT - Free Report) posted U.S. comparable sales growth of 4.1% in the first quarter of fiscal 2027, driven by higher customer transactions, increased unit volumes and strong e-commerce performance. Walmart continued to gain market share across income groups while benefiting from growth in advertising, marketplace sales and Walmart+ membership revenues. Walmart’s results reflected steady demand for both grocery and general merchandise offerings.
Meanwhile, Target Corporation (TGT - Free Report) delivered comparable sales growth of 5.6% in the first quarter of fiscal 2026, supported by a 4.4% increase in traffic and strength across both stores and digital channels. Target reported sales growth in all six core merchandise categories, with broad-based demand across guest demographics. Target also highlighted momentum in beauty, food and wellness categories. As Target executes its merchandising and store experience initiatives, the retailer remains focused on driving sustainable long-term growth.
What the Latest Metrics Say About Costco
Costco has seen its shares tumble 1.7% over the past three months against the industry’s growth of 3.5%.
Image Source: Zacks Investment Research
From a valuation standpoint, Costco's forward 12-month price-to-earnings ratio stands at 44.47, higher than the industry’s ratio of 32.24. However, it is trading below its 12-month median level of 46.27, indicating some moderation in valuation despite sustained investor confidence in the stock.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Costco’s current financial-year sales and earnings per share implies year-over-year growth of 9.4% and 13.3%, respectively. For the next fiscal year, the consensus estimate indicates a 7.8% rise in sales and 10.2% growth in earnings.
The consensus estimate for earnings per share for the current and next fiscal year has increased by 7 cents and 8 cents to $20.38 and $22.46, respectively.
Image Source: Zacks Investment Research
Costco currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.