We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Costco's ancillary businesses lifted gross margin, with comparable sales surging in the high 20s range.
Gasoline reached record volumes as U.S. member household penetration hit an all-time high.
Pharmacy and travel growth, including cruises, expanded Costco's member spending opportunities.
Costco Wholesale Corporation’s (COST - Free Report) ancillary businesses have become a pivotal driver of member engagement, expanding the company’s share-of-wallet opportunity across its global member base. During the fourth quarter of fiscal 2026, the gross margin for ancillary and other businesses increased 23 basis points year over year and 32 basis points excluding gasoline inflation. Comparable sales in ancillary operations performed exceptionally well, surging in the high 20s percentage range, driven primarily by strong performance in gasoline, pharmacy and travel offerings.
Costco’s gasoline business reached a milestone in fiscal 2026, achieving record volumes as U.S. member household penetration hit an all-time high. Members saved an estimated $3.2 billion at the pump compared to regional market averages. To support throughput and accommodate volume growth, Costco expanded 26 high-volume U.S. gas stations.
The pharmacy department experienced nearly 20% sales growth, driven by digital options such as Rx Mobile Pay Ahead and Pickup Lockers, alongside specialized GLP-1 and fertility programs. These initiatives yielded double-digit script growth, helping offset Medicare Maximum Fair Price adjustments. Costco announced a partnership with SCAN Health Systems to develop Medicare Advantage benefits.
Meanwhile, Costco Travel achieved double-digit growth across vacation packages, cruises and car rentals. Cruise bookings alone expanded by 16%, with more than 750,000 members sent on cruises during the fiscal year. Together, these ancillary services deepen member loyalty and capture greater household spending beyond core merchandise categories.
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 4.3% over the past three months compared with the industry’s 2.5% decline. While Dollar General shares have risen 1.2%, Target has jumped 20.4% 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 40.02, higher than the industry’s ratio of 27.39. However, the stock is trading below its 12-month median level of 45.07, indicating some moderation in valuation.
Costco is trading at a premium to Target (with a forward 12-month P/E ratio of 16.08) and Dollar General (14.54).
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 implies year-over-year growth of 8.3% and 11.8%, respectively. For the next fiscal year, the consensus estimate indicates a 7.2% rise in sales and 9.1% growth in earnings.
The Zacks Consensus Estimate for earnings for the current fiscal year has increased by 36 cents to $22.87 per share, while the estimate for the next fiscal year has risen by 44 cents to $24.94 per share over the past seven days.
View the Zacks #1 Rank List
Image: Bigstock
Costco's Ancillary Businesses Expand Share-of-Wallet Opportunity
Key Takeaways
Costco Wholesale Corporation’s (COST - Free Report) ancillary businesses have become a pivotal driver of member engagement, expanding the company’s share-of-wallet opportunity across its global member base. During the fourth quarter of fiscal 2026, the gross margin for ancillary and other businesses increased 23 basis points year over year and 32 basis points excluding gasoline inflation. Comparable sales in ancillary operations performed exceptionally well, surging in the high 20s percentage range, driven primarily by strong performance in gasoline, pharmacy and travel offerings.
Costco’s gasoline business reached a milestone in fiscal 2026, achieving record volumes as U.S. member household penetration hit an all-time high. Members saved an estimated $3.2 billion at the pump compared to regional market averages. To support throughput and accommodate volume growth, Costco expanded 26 high-volume U.S. gas stations.
The pharmacy department experienced nearly 20% sales growth, driven by digital options such as Rx Mobile Pay Ahead and Pickup Lockers, alongside specialized GLP-1 and fertility programs. These initiatives yielded double-digit script growth, helping offset Medicare Maximum Fair Price adjustments. Costco announced a partnership with SCAN Health Systems to develop Medicare Advantage benefits.
Meanwhile, Costco Travel achieved double-digit growth across vacation packages, cruises and car rentals. Cruise bookings alone expanded by 16%, with more than 750,000 members sent on cruises during the fiscal year. Together, these ancillary services deepen member loyalty and capture greater household spending beyond core merchandise categories.
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 4.3% over the past three months compared with the industry’s 2.5% decline. While Dollar General shares have risen 1.2%, Target has jumped 20.4% 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 40.02, higher than the industry’s ratio of 27.39. However, the stock is trading below its 12-month median level of 45.07, indicating some moderation in valuation.
Costco is trading at a premium to Target (with a forward 12-month P/E ratio of 16.08) and Dollar General (14.54).
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 implies year-over-year growth of 8.3% and 11.8%, respectively. For the next fiscal year, the consensus estimate indicates a 7.2% rise in sales and 9.1% growth in earnings.
The Zacks Consensus Estimate for earnings for the current fiscal year has increased by 36 cents to $22.87 per share, while the estimate for the next fiscal year has risen by 44 cents to $24.94 per share over the past seven days.
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.