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Can International Markets Become Costco's Biggest Driver?
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Key Takeaways
Costco's Other International comps rose 11.2% in fiscal Q3, ahead of the U.S. and Canada.
Management sees strong Costco expansion potential in China, Korea, Japan, Taiwan, Spain and France.
Costco's China Executive Membership beat early expectations, while same-day delivery expanded in Europe.
Costco Wholesale Corporation’s (COST - Free Report) international operations are emerging as a more meaningful part of its growth strategy, helped by solid comparable sales and a sizable runway for new warehouses. Other International comparable sales rose 11.2% in the third quarter of fiscal 2026, ahead of the United States at 9.4% and Canada at 10.7%. Excluding gasoline and foreign-exchange effects, Other International comps increased 5.9% versus 6.8% in the United States and 6.2% in Canada.
Performance over a broader period remains encouraging. For the first 48 weeks of fiscal 2026, Other International comparable sales advanced 9.8% versus 8.1% in both the United States and Canada. On an adjusted basis, growth was 6.5%, close to the U.S. rate of 6.7% and Canada’s 7%.
The bigger opportunity lies in expansion. Management sees strong potential in China, Korea and Japan, additional openings in Taiwan, room to grow in Spain and France and continued strength in the U.K. It expects strong international expansion over the next five to 10 years. Costco also launched Executive Membership in China, where early adoption exceeded expectations, while same-day delivery recently expanded to Spain and France.
While the United States still dominates, what particularly makes international markets important is the amount of white space still available. The combination of new-market capacity and deeper membership engagement gives international markets a growing role in the company’s overall sales mix.
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 jump 9.6% year to date compared with the industry’s 8.6% rise. While Dollar General shares have fallen 7.5%, Target has surged 66.9% over the same 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 42.00, higher than the industry’s ratio of 29.38. However, the stock is trading below its 12-month median level of 45.56, indicating some moderation in valuation.
Costco is trading at a premium to Target (with a forward 12-month P/E ratio of 16.73) and Dollar General (15.73).
Image Source: Zacks Investment Research
What Do Earnings Estimates Signal for Costco?
The Zacks Consensus Estimate for Costco’s current fiscal-year sales and earnings per share suggests year-over-year growth of 9.7% and 13.5%, respectively. For the next fiscal year, the consensus estimate points to sales growth of 7.8% and earnings growth of 10.2%. Over the past 30 days, the Zacks Consensus Estimate for current-year earnings has remained unchanged at $20.42, while the estimate for the next fiscal year has increased by a penny to $22.51.
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Can International Markets Become Costco's Biggest Driver?
Key Takeaways
Costco Wholesale Corporation’s (COST - Free Report) international operations are emerging as a more meaningful part of its growth strategy, helped by solid comparable sales and a sizable runway for new warehouses. Other International comparable sales rose 11.2% in the third quarter of fiscal 2026, ahead of the United States at 9.4% and Canada at 10.7%. Excluding gasoline and foreign-exchange effects, Other International comps increased 5.9% versus 6.8% in the United States and 6.2% in Canada.
Performance over a broader period remains encouraging. For the first 48 weeks of fiscal 2026, Other International comparable sales advanced 9.8% versus 8.1% in both the United States and Canada. On an adjusted basis, growth was 6.5%, close to the U.S. rate of 6.7% and Canada’s 7%.
The bigger opportunity lies in expansion. Management sees strong potential in China, Korea and Japan, additional openings in Taiwan, room to grow in Spain and France and continued strength in the U.K. It expects strong international expansion over the next five to 10 years. Costco also launched Executive Membership in China, where early adoption exceeded expectations, while same-day delivery recently expanded to Spain and France.
While the United States still dominates, what particularly makes international markets important is the amount of white space still available. The combination of new-market capacity and deeper membership engagement gives international markets a growing role in the company’s overall sales mix.
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 jump 9.6% year to date compared with the industry’s 8.6% rise. While Dollar General shares have fallen 7.5%, Target has surged 66.9% over the same 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 42.00, higher than the industry’s ratio of 29.38. However, the stock is trading below its 12-month median level of 45.56, indicating some moderation in valuation.
Costco is trading at a premium to Target (with a forward 12-month P/E ratio of 16.73) and Dollar General (15.73).
Image Source: Zacks Investment Research
What Do Earnings Estimates Signal for Costco?
The Zacks Consensus Estimate for Costco’s current fiscal-year sales and earnings per share suggests year-over-year growth of 9.7% and 13.5%, respectively. For the next fiscal year, the consensus estimate points to sales growth of 7.8% and earnings growth of 10.2%. Over the past 30 days, the Zacks Consensus Estimate for current-year earnings has remained unchanged at $20.42, while the estimate for the next fiscal year has increased by a penny to $22.51.
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.