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Should You Buy, Hold or Sell Costco Stock After Its Q4 Earnings Beat?
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Key Takeaways
Costco reported Q4 adjusted EPS of $6.60, with revenues up 11.1% year over year.
Membership fee income rose 7.3% as paid members reached 84.1 million.
Costco's digital comparable sales grew 19.5%, with app traffic up 30%.
Costco Wholesale Corporation (COST - Free Report) continues to demonstrate the strength of its membership-driven model as it closes fiscal 2026 with solid operational momentum. The warehouse club operator’s latest quarterly performance reflected broad-based resilience, supported by strong member engagement, healthy demand trends and continued expansion across physical and digital channels. Costco’s focus on delivering value through curated product offerings, competitive pricing and a differentiated shopping experience has helped it maintain customer loyalty in a dynamic retail environment.
However, after the latest earnings beat, investors are now evaluating whether Costco can sustain its growth trajectory amid changing consumer trends and an evolving retail landscape. Examining the company’s recent performance, key growth drivers and potential challenges will help determine whether Costco stock is a Buy, Hold or Sell following its quarterly results.
Costco Delivers Another Quarter of Strong Growth
Costco shares have risen 3.1% since the company released its fourth-quarter results on Sept. 24. Costco reported adjusted earnings of $6.60 per share, beating the Zacks Consensus Estimate of $6.48 and increasing 12.4% year over year. Reported earnings came in at $6.75 per share, including a 15-cent nonrecurring benefit related to tariff refunds. Total revenues rose 11.1% year over year to $95,723 million, surpassing the consensus estimate of $94,820 million. (Read: COST Q4 Earnings Beat Estimates on Sales and Digital Strength)
The quarterly performance reflected healthy demand trends across Costco’s business channels. Adjusted comparable sales, excluding gasoline price and foreign exchange impacts, increased 6.7%. Membership remained a key contributor, with membership fee income rising 7.3% to $1,850 million, supported by continued member engagement.
Costco benefited from higher shopping frequency and increased spending per visit during the quarter. Worldwide traffic grew 3.3%, while the average transaction value increased 5.9%. The company continued leveraging its value-focused merchandising strategy, with growth across warehouses, ancillary businesses and digital platforms.
How Consensus Estimates Stack Up for Costco Post Q4 Earnings
Over the past seven days, the Zacks Consensus Estimate for the current fiscal year has moved up by 30 cents to $22.80, while the estimate for the next fiscal year has increased 44 cents to $24.90. These estimates indicate expected year-over-year growth rates of 11.5% and 9.2%, respectively.
Image Source: Zacks Investment Research
Costco’s Winning Formula: Membership and Digital Expansion
Costco’s membership ecosystem represents a competitive advantage, supporting recurring revenue growth, customer loyalty and higher spending intensity. Members pay for access to consistent savings and quality merchandise. Membership fee income increased 7.3% year over year to $1,850 million during the final quarter of fiscal 2026. Costco’s ability to maintain member trust by offering high-quality products at attractive prices has allowed it to strengthen customer relationships. The worldwide renewal rate improved to 89.8%, while the United States and Canada renewal rate reached 92.3%, reflecting continued member satisfaction and engagement.
The company continues to deepen relationships with existing members while attracting younger customers. Rising executive membership penetration, stronger digital engagement and improving retention trends indicate that Costco’s customer base is becoming increasingly valuable. Costco ended the quarter with 84.1 million paid members, up 3.8%, and 150.4 million cardholders, up 3.6%. Executive memberships reached 42.3 million, growing 9.4%, with executive members accounting for 75.6% of sales. Executive members typically spend more and show stronger loyalty, supporting higher lifetime customer value over time.
Costco’s warehouse expansion strategy provides a significant runway for future growth. The company continues to identify opportunities across domestic and international markets, including new markets, mature-market infill locations and expansion opportunities overseas. During fiscal 2026, Costco opened 28 warehouses, including three relocations, resulting in 25 net new buildings and bringing the global warehouse count to 939. Management plans to open another 33 warehouses in fiscal 2027, including five relocations, while targeting a long-term pace of approximately 30 net new warehouse openings annually.
Costco’s digital transformation is becoming an increasingly important growth contributor. In the quarter, digitally enabled comparable sales increased 19.5%. E-commerce site and app traffic increased 30%, supported by stronger digital capabilities and expanded delivery partnerships. Costco’s partnerships with Instacart, DoorDash and Uber Eats provide members with greater convenience. The company is also leveraging artificial intelligence and personalization to improve product discovery and customer engagement. Costco reported triple-digit growth in sales from personalized initiatives during the quarter. Traffic originating from AI search grew in triple digits for the second consecutive quarter.
The company’s Kirkland Signature private-label brand, ancillary businesses and disciplined merchandising approach provide additional competitive advantages. Kirkland Signature allows Costco to offer differentiated products with strong value, while businesses such as gas, pharmacy and travel increase member engagement and encourage customers to spend more. With a strong balance sheet, including $20,207 million in cash and cash equivalents and $15,825 million in operating cash flow, Costco has substantial financial flexibility to fund warehouse expansion, supply-chain investments and digital initiatives while continuing shareholder returns.
Costco Navigates Competitive Landscape as Peers Scale Up
Costco's impressive sales figures are part of a larger retail picture where competition is intensifying. Rivals like Dollar General Corporation (DG - Free Report) and Target Corporation (TGT - Free Report) are investing in expanding their product assortments, enhancing supply-chain efficiency and upgrading in-store and digital experiences to capture greater market share. These retailers are also sharpening their value propositions through competitive pricing, private-label expansion and targeted promotional strategies.
Margins remain an area to monitor, as Costco continues to navigate rising costs related to healthcare, general liability, commodities, freight and tariffs. While the company has leveraged productivity initiatives and supply-chain efficiencies to mitigate some pressures, uncertainty around oil prices, tariffs and other input costs could weigh on margin performance.
Does Costco Tick the Boxes for Value Investing?
Costco stock has climbed 7.1% year to date compared with the industry’s rise of 6.4%. A sneak peek into key retail peers' performance reveals that shares of Dollar General have tumbled 7.6% during the same time frame, while Target has surged 60%.
Image Source: Zacks Investment Research
Despite Costco’s strong fundamentals, its premium valuation remains a key consideration for investors. The stock has historically commanded a premium multiple due to its consistency, brand strength and membership economics.
Costco's forward 12-month price-to-earnings ratio stands at 40.65, higher than the industry’s ratio of 27.35. However, it is trading below its 12-month median level of 45.10, indicating some moderation in valuation. Costco is trading at a premium to Target (with a forward 12-month P/E ratio of 16.05) and Dollar General (14.92).
Image Source: Zacks Investment Research
How to Play Costco Stock: Buy, Hold or Sell?
Costco’s strong membership ecosystem, consistent execution and expanding digital capabilities continue to support its long-term growth story. However, the stock’s premium valuation and potential margin pressures from rising costs warrant a balanced approach. Existing investors may consider holding the stock while monitoring valuation and profitability trends, whereas potential investors may look for more favorable entry opportunities before initiating positions. Costco remains a fundamentally strong company. Costco currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
View the Zacks #1 Rank List
Image: Bigstock
Should You Buy, Hold or Sell Costco Stock After Its Q4 Earnings Beat?
Key Takeaways
Costco Wholesale Corporation (COST - Free Report) continues to demonstrate the strength of its membership-driven model as it closes fiscal 2026 with solid operational momentum. The warehouse club operator’s latest quarterly performance reflected broad-based resilience, supported by strong member engagement, healthy demand trends and continued expansion across physical and digital channels. Costco’s focus on delivering value through curated product offerings, competitive pricing and a differentiated shopping experience has helped it maintain customer loyalty in a dynamic retail environment.
However, after the latest earnings beat, investors are now evaluating whether Costco can sustain its growth trajectory amid changing consumer trends and an evolving retail landscape. Examining the company’s recent performance, key growth drivers and potential challenges will help determine whether Costco stock is a Buy, Hold or Sell following its quarterly results.
Costco Delivers Another Quarter of Strong Growth
Costco shares have risen 3.1% since the company released its fourth-quarter results on Sept. 24. Costco reported adjusted earnings of $6.60 per share, beating the Zacks Consensus Estimate of $6.48 and increasing 12.4% year over year. Reported earnings came in at $6.75 per share, including a 15-cent nonrecurring benefit related to tariff refunds. Total revenues rose 11.1% year over year to $95,723 million, surpassing the consensus estimate of $94,820 million. (Read: COST Q4 Earnings Beat Estimates on Sales and Digital Strength)
The quarterly performance reflected healthy demand trends across Costco’s business channels. Adjusted comparable sales, excluding gasoline price and foreign exchange impacts, increased 6.7%. Membership remained a key contributor, with membership fee income rising 7.3% to $1,850 million, supported by continued member engagement.
Costco benefited from higher shopping frequency and increased spending per visit during the quarter. Worldwide traffic grew 3.3%, while the average transaction value increased 5.9%. The company continued leveraging its value-focused merchandising strategy, with growth across warehouses, ancillary businesses and digital platforms.
How Consensus Estimates Stack Up for Costco Post Q4 Earnings
Over the past seven days, the Zacks Consensus Estimate for the current fiscal year has moved up by 30 cents to $22.80, while the estimate for the next fiscal year has increased 44 cents to $24.90. These estimates indicate expected year-over-year growth rates of 11.5% and 9.2%, respectively.
Image Source: Zacks Investment Research
Costco’s Winning Formula: Membership and Digital Expansion
Costco’s membership ecosystem represents a competitive advantage, supporting recurring revenue growth, customer loyalty and higher spending intensity. Members pay for access to consistent savings and quality merchandise. Membership fee income increased 7.3% year over year to $1,850 million during the final quarter of fiscal 2026. Costco’s ability to maintain member trust by offering high-quality products at attractive prices has allowed it to strengthen customer relationships. The worldwide renewal rate improved to 89.8%, while the United States and Canada renewal rate reached 92.3%, reflecting continued member satisfaction and engagement.
The company continues to deepen relationships with existing members while attracting younger customers. Rising executive membership penetration, stronger digital engagement and improving retention trends indicate that Costco’s customer base is becoming increasingly valuable. Costco ended the quarter with 84.1 million paid members, up 3.8%, and 150.4 million cardholders, up 3.6%. Executive memberships reached 42.3 million, growing 9.4%, with executive members accounting for 75.6% of sales. Executive members typically spend more and show stronger loyalty, supporting higher lifetime customer value over time.
Costco’s warehouse expansion strategy provides a significant runway for future growth. The company continues to identify opportunities across domestic and international markets, including new markets, mature-market infill locations and expansion opportunities overseas. During fiscal 2026, Costco opened 28 warehouses, including three relocations, resulting in 25 net new buildings and bringing the global warehouse count to 939. Management plans to open another 33 warehouses in fiscal 2027, including five relocations, while targeting a long-term pace of approximately 30 net new warehouse openings annually.
Costco’s digital transformation is becoming an increasingly important growth contributor. In the quarter, digitally enabled comparable sales increased 19.5%. E-commerce site and app traffic increased 30%, supported by stronger digital capabilities and expanded delivery partnerships. Costco’s partnerships with Instacart, DoorDash and Uber Eats provide members with greater convenience. The company is also leveraging artificial intelligence and personalization to improve product discovery and customer engagement. Costco reported triple-digit growth in sales from personalized initiatives during the quarter. Traffic originating from AI search grew in triple digits for the second consecutive quarter.
The company’s Kirkland Signature private-label brand, ancillary businesses and disciplined merchandising approach provide additional competitive advantages. Kirkland Signature allows Costco to offer differentiated products with strong value, while businesses such as gas, pharmacy and travel increase member engagement and encourage customers to spend more. With a strong balance sheet, including $20,207 million in cash and cash equivalents and $15,825 million in operating cash flow, Costco has substantial financial flexibility to fund warehouse expansion, supply-chain investments and digital initiatives while continuing shareholder returns.
Costco Navigates Competitive Landscape as Peers Scale Up
Costco's impressive sales figures are part of a larger retail picture where competition is intensifying. Rivals like Dollar General Corporation (DG - Free Report) and Target Corporation (TGT - Free Report) are investing in expanding their product assortments, enhancing supply-chain efficiency and upgrading in-store and digital experiences to capture greater market share. These retailers are also sharpening their value propositions through competitive pricing, private-label expansion and targeted promotional strategies.
Margins remain an area to monitor, as Costco continues to navigate rising costs related to healthcare, general liability, commodities, freight and tariffs. While the company has leveraged productivity initiatives and supply-chain efficiencies to mitigate some pressures, uncertainty around oil prices, tariffs and other input costs could weigh on margin performance.
Does Costco Tick the Boxes for Value Investing?
Costco stock has climbed 7.1% year to date compared with the industry’s rise of 6.4%. A sneak peek into key retail peers' performance reveals that shares of Dollar General have tumbled 7.6% during the same time frame, while Target has surged 60%.
Image Source: Zacks Investment Research
Despite Costco’s strong fundamentals, its premium valuation remains a key consideration for investors. The stock has historically commanded a premium multiple due to its consistency, brand strength and membership economics.
Costco's forward 12-month price-to-earnings ratio stands at 40.65, higher than the industry’s ratio of 27.35. However, it is trading below its 12-month median level of 45.10, indicating some moderation in valuation. Costco is trading at a premium to Target (with a forward 12-month P/E ratio of 16.05) and Dollar General (14.92).
Image Source: Zacks Investment Research
How to Play Costco Stock: Buy, Hold or Sell?
Costco’s strong membership ecosystem, consistent execution and expanding digital capabilities continue to support its long-term growth story. However, the stock’s premium valuation and potential margin pressures from rising costs warrant a balanced approach. Existing investors may consider holding the stock while monitoring valuation and profitability trends, whereas potential investors may look for more favorable entry opportunities before initiating positions. Costco remains a fundamentally strong company. Costco currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.