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Can Costco Stock Reach New Highs in Member Monetization?
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Key Takeaways
Costco membership fee revenues rose 10.7%, while Executive memberships grew 9.6% to 41.2 million.
Executive members generated 75% of Costco sales, as upgrades and new premium sign-ups continued.
Costco's personalized recommendations drove 3x conversion rates and nearly $500 million in e-commerce sales.
Costco Wholesale Corporation (COST - Free Report) continues to unlock fresh potential in member monetization by expanding its high-value executive tier and deepening digital engagement. During the third quarter of fiscal 2026, membership fee revenues climbed 10.7% to $1,373 million from the year-ago period. The September 2024 membership fee increase contributed a little more than one-fourth of that growth. Excluding the fee increase and foreign exchange effects, membership income still advanced 7% year over year.
A key driver of this acceleration remains the strong momentum in Executive memberships, which grew 9.6% year over year to 41.2 million. Executive members also accounted for 75% of sales. Management said these members generally shop more frequently and spend more. Costco is seeing both Gold Star members upgrade and a higher share of new members choose Executive membership.
The expansion of Executive memberships into international markets such as China highlights additional runway for growth. Early adoption in China has exceeded expectations, showing that premium membership structures hold strong appeal across diverse geographies. Targeted digital communications and retention initiatives are helping stabilize renewal rates, even as online sign-ups naturally scale. Global renewal rates reached 89.7%, while U.S. and Canada renewals ticked up to 92.2% at the end of the third quarter.
Beyond core fee increases, member monetization is benefiting from expanded digital capabilities and value-added services. Personalized product recommendation carousels delivered conversion rates three times higher than standard rates, generating nearly half a billion dollars in e-commerce sales during the quarter. Enhanced pharmacy offerings, including GLP-1 treatments and member prescription programs, alongside third-party same-day delivery services, are driving higher engagement among top-tier spenders.
By growing its higher-tier memberships and offering more digital and convenient services, Costco continues to strengthen member monetization.
How Does Costco Stack Up Against Its Industry?
Costco, which competes with Dollar General Corporation (DG - Free Report) and Target Corporation (TGT - Free Report) , has seen its shares drop 10.7% over the past three months compared with the industry’s 1.1% decline. While shares of Dollar General have risen 16%, those of Target have jumped 25.2% in the aforementioned period.
Image Source: Zacks Investment Research
What Does Costco’s Current Valuation Suggest?
From a valuation standpoint, Costco's forward 12-month price-to-earnings ratio stands at 42.85, higher than the industry’s ratio of 31.18. However, the stock is trading below its 12-month median level of 45.79, indicating some moderation in valuation despite sustained investor confidence in the stock.
Costco is trading at a premium to Target (with a forward 12-month P/E ratio of 17.75) and Dollar General (15.97).
Image Source: Zacks Investment Research
What Do Earnings Estimates Signal for Costco?
The Zacks Consensus Estimate for Costco’s current financial-year sales and earnings per share implies year-over-year growth of 9.7% and 13.5%, respectively. For the next fiscal year, the consensus estimate indicates a 7.8% rise in sales and 10.2% growth in earnings.
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Can Costco Stock Reach New Highs in Member Monetization?
Key Takeaways
Costco Wholesale Corporation (COST - Free Report) continues to unlock fresh potential in member monetization by expanding its high-value executive tier and deepening digital engagement. During the third quarter of fiscal 2026, membership fee revenues climbed 10.7% to $1,373 million from the year-ago period. The September 2024 membership fee increase contributed a little more than one-fourth of that growth. Excluding the fee increase and foreign exchange effects, membership income still advanced 7% year over year.
A key driver of this acceleration remains the strong momentum in Executive memberships, which grew 9.6% year over year to 41.2 million. Executive members also accounted for 75% of sales. Management said these members generally shop more frequently and spend more. Costco is seeing both Gold Star members upgrade and a higher share of new members choose Executive membership.
The expansion of Executive memberships into international markets such as China highlights additional runway for growth. Early adoption in China has exceeded expectations, showing that premium membership structures hold strong appeal across diverse geographies. Targeted digital communications and retention initiatives are helping stabilize renewal rates, even as online sign-ups naturally scale. Global renewal rates reached 89.7%, while U.S. and Canada renewals ticked up to 92.2% at the end of the third quarter.
Beyond core fee increases, member monetization is benefiting from expanded digital capabilities and value-added services. Personalized product recommendation carousels delivered conversion rates three times higher than standard rates, generating nearly half a billion dollars in e-commerce sales during the quarter. Enhanced pharmacy offerings, including GLP-1 treatments and member prescription programs, alongside third-party same-day delivery services, are driving higher engagement among top-tier spenders.
By growing its higher-tier memberships and offering more digital and convenient services, Costco continues to strengthen member monetization.
How Does Costco Stack Up Against Its Industry?
Costco, which competes with Dollar General Corporation (DG - Free Report) and Target Corporation (TGT - Free Report) , has seen its shares drop 10.7% over the past three months compared with the industry’s 1.1% decline. While shares of Dollar General have risen 16%, those of Target have jumped 25.2% in the aforementioned period.
Image Source: Zacks Investment Research
What Does Costco’s Current Valuation Suggest?
From a valuation standpoint, Costco's forward 12-month price-to-earnings ratio stands at 42.85, higher than the industry’s ratio of 31.18. However, the stock is trading below its 12-month median level of 45.79, indicating some moderation in valuation despite sustained investor confidence in the stock.
Costco is trading at a premium to Target (with a forward 12-month P/E ratio of 17.75) and Dollar General (15.97).
Image Source: Zacks Investment Research
What Do Earnings Estimates Signal for Costco?
The Zacks Consensus Estimate for Costco’s current financial-year sales and earnings per share implies year-over-year growth of 9.7% and 13.5%, respectively. For the next fiscal year, the consensus estimate indicates a 7.8% rise in sales and 10.2% growth in earnings.
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.