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Should You Buy Costco Stock Now After Strong September Retail Sales?
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Key Takeaways
Costco's September net sales surged 13% to $30.02 billion, with comparable sales rising 11.4%.
Costco's membership growth, digital expansion and plans for 33 warehouse openings support its outlook.
COST's forward P/E of 41.55 exceeds the industry's 27.76, suggesting investors wait for a better entry point.
Costco Wholesale Corporation’s (COST - Free Report) September sales update offers fresh insight into the retail giant’s momentum. A dominant force in the warehouse club space with a long track record of growth, Costco has remained an investor favorite. However, the latest sales figures raise a key question: Should investors buy the stock now, hold their positions or book profits?
The September report showed solid comparable sales growth across regions, along with accelerating e-commerce sales. This reinforces the view that Costco’s operational execution and customer loyalty remain strong despite a challenging retail backdrop.
Breaking Down Costco’s September Sales Report
Costco reported net sales of $30.02 billion for the five weeks ended Oct. 4, 2026, representing a 13% increase from $26.58 billion in the year-ago period. Total comparable sales rose 11.4%, reflecting healthy demand across its operating regions. Comparable sales increased 12.5% in the United States, 6.3% in Canada and 10.8% in Other International markets. Excluding the impacts of gasoline price fluctuations and foreign exchange movements, total comparable sales advanced 7.6%.
Costco’s membership-driven business model remains a key competitive strength, with high renewal rates providing a steady revenue stream and reinforcing customer loyalty. Its bulk purchasing power, strong supplier relationships and efficient inventory management enable the retailer to maintain competitive pricing. This value-focused approach resonates with budget-conscious consumers seeking affordability and quality, supporting consistent demand and strengthening Costco’s position in a competitive retail environment. (Read: Costco's September Sales Rise 13% on Strong Comps, Digital Growth)
Unlocking Costco’s Growth Drivers
Costco continues to stand out as a compelling long-term investment opportunity, supported by its resilient business model, strong customer loyalty and continued market-share gains. The warehouse retailer’s focus on offering quality merchandise at competitive prices continues to attract shoppers and encourage higher spending, even in an uncertain consumer environment. Its ability to cater to both value-conscious households and consumers seeking premium products strengthens its competitive positioning. The continued expansion of its Kirkland Signature private-label portfolio, which offers meaningful savings over national brands without compromising quality, reinforces Costco’s pricing advantage.
The company’s membership-driven business model remains a cornerstone of its long-term investment appeal, providing a dependable recurring revenue stream and supporting sustained customer engagement. Costco ended fiscal 2026 with 84.1 million paid memberships, representing 3.8% growth, while total cardholders increased 3.6% to 150.4 million. Fourth-quarter membership fee income advanced 7.3% to approximately $1,850 million. Worldwide renewal rates improved 10 basis points sequentially to 89.8%, while U.S. and Canadian renewal rates reached 92.3%. The company is also attracting younger consumers, with members under 40 now representing more than a quarter of its membership base.
Growing adoption of Costco’s premium Executive membership tier provides a meaningful opportunity to strengthen customer engagement and increase spending per member. Executive members generally spend more and renew at higher rates than Gold Star members. Costco ended fiscal 2026 with 42.3 million paid Executive members, up 9.4% year over year. These members accounted for 75.6% of total sales. Management believes the combination of membership expansion, stronger Executive penetration and greater spending per member can sustain revenue growth. Targeted digital communications, enhanced membership benefits and personalized engagement initiatives should further reinforce customer loyalty and strengthen Costco’s ability to capture a larger share of household spending.
Costco’s expanding digital capabilities provide another compelling growth avenue as consumers increasingly prioritize convenience, faster fulfillment and seamless shopping experiences. The retailer is strengthening its omnichannel ecosystem through website and mobile application improvements, personalized product recommendations, and expanded delivery partnerships with Instacart, DoorDash and Uber Eats. These initiatives are helping attract younger shoppers and capture additional purchasing occasions beyond traditional warehouse visits. Digitally enabled sales exceeded $33 billion in fiscal 2026, growing more than 20%. Management indicated that third-party delivery sales are largely incremental, complementing rather than replacing warehouse purchases. Costco is also exploring opportunities in artificial intelligence-driven product discovery while improving online product visibility and customer engagement.
Costco’s expanding warehouse network and diversified ancillary businesses further strengthen its long-term growth prospects. The company ended fiscal 2026 with 939 warehouses worldwide and plans to open 33 locations in fiscal 2027, including five relocations. Its longer-term ambition of reaching approximately 30 net new warehouses annually highlights substantial opportunities across underserved U.S. markets and international regions. Alongside physical expansion, Costco continues to broaden its appeal through gasoline, pharmacy and travel services, which provide compelling reasons for members to engage more frequently with the brand. Management plans roughly $7.5 billion in fiscal 2027 capital expenditures, primarily supporting warehouse expansion and supply-chain improvements. These investments should strengthen Costco’s operating capabilities and support sustainable growth over the long term.
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 11.2% year to date compared with the industry’s rise of 8.4%. A sneak peek into key retail peers' performance reveals that shares of Dollar General have tumbled 4.7% during the same time frame, while Target has surged 57.1%.
Image Source: Zacks Investment Research
Despite Costco’s strong fundamentals, its premium valuation remains a key consideration for investors. The stock has commanded a premium multiple due to its consistency, brand strength and membership economics.
Costco's forward 12-month price-to-earnings ratio stands at 41.55, higher than the industry’s ratio of 27.76. However, it is trading below its 12-month median level of 44.79, indicating some moderation in valuation. Costco is trading at a premium to Target (with a forward 12-month P/E ratio of 15.78) and Dollar General (15.32).
Image Source: Zacks Investment Research
How Consensus Estimates Stack Up for Costco
The Zacks Consensus Estimate for Costco’s current fiscal-year sales and earnings per share implies year-over-year growth of 8.2% and 11.7%, respectively. For the next fiscal year, the consensus estimate indicates a 7.1% rise in sales and 9.1% growth in earnings.
Image Source: Zacks Investment Research
How to Play Costco Stock: Buy, Hold or Sell?
Costco’s strong September sales, loyal membership base, expanding digital capabilities and warehouse growth plans reinforce its long-term investment appeal. However, its premium valuation, intensifying competition and lingering cost pressures warrant a measured approach despite encouraging earnings growth expectations. Existing investors may consider holding their positions to benefit from Costco’s long-term growth prospects, while prospective investors should wait for a more attractive entry point before initiating positions.
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Should You Buy Costco Stock Now After Strong September Retail Sales?
Key Takeaways
Costco Wholesale Corporation’s (COST - Free Report) September sales update offers fresh insight into the retail giant’s momentum. A dominant force in the warehouse club space with a long track record of growth, Costco has remained an investor favorite. However, the latest sales figures raise a key question: Should investors buy the stock now, hold their positions or book profits?
The September report showed solid comparable sales growth across regions, along with accelerating e-commerce sales. This reinforces the view that Costco’s operational execution and customer loyalty remain strong despite a challenging retail backdrop.
Breaking Down Costco’s September Sales Report
Costco reported net sales of $30.02 billion for the five weeks ended Oct. 4, 2026, representing a 13% increase from $26.58 billion in the year-ago period. Total comparable sales rose 11.4%, reflecting healthy demand across its operating regions. Comparable sales increased 12.5% in the United States, 6.3% in Canada and 10.8% in Other International markets. Excluding the impacts of gasoline price fluctuations and foreign exchange movements, total comparable sales advanced 7.6%.
Costco’s membership-driven business model remains a key competitive strength, with high renewal rates providing a steady revenue stream and reinforcing customer loyalty. Its bulk purchasing power, strong supplier relationships and efficient inventory management enable the retailer to maintain competitive pricing. This value-focused approach resonates with budget-conscious consumers seeking affordability and quality, supporting consistent demand and strengthening Costco’s position in a competitive retail environment. (Read: Costco's September Sales Rise 13% on Strong Comps, Digital Growth)
Unlocking Costco’s Growth Drivers
Costco continues to stand out as a compelling long-term investment opportunity, supported by its resilient business model, strong customer loyalty and continued market-share gains. The warehouse retailer’s focus on offering quality merchandise at competitive prices continues to attract shoppers and encourage higher spending, even in an uncertain consumer environment. Its ability to cater to both value-conscious households and consumers seeking premium products strengthens its competitive positioning. The continued expansion of its Kirkland Signature private-label portfolio, which offers meaningful savings over national brands without compromising quality, reinforces Costco’s pricing advantage.
The company’s membership-driven business model remains a cornerstone of its long-term investment appeal, providing a dependable recurring revenue stream and supporting sustained customer engagement. Costco ended fiscal 2026 with 84.1 million paid memberships, representing 3.8% growth, while total cardholders increased 3.6% to 150.4 million. Fourth-quarter membership fee income advanced 7.3% to approximately $1,850 million. Worldwide renewal rates improved 10 basis points sequentially to 89.8%, while U.S. and Canadian renewal rates reached 92.3%. The company is also attracting younger consumers, with members under 40 now representing more than a quarter of its membership base.
Growing adoption of Costco’s premium Executive membership tier provides a meaningful opportunity to strengthen customer engagement and increase spending per member. Executive members generally spend more and renew at higher rates than Gold Star members. Costco ended fiscal 2026 with 42.3 million paid Executive members, up 9.4% year over year. These members accounted for 75.6% of total sales. Management believes the combination of membership expansion, stronger Executive penetration and greater spending per member can sustain revenue growth. Targeted digital communications, enhanced membership benefits and personalized engagement initiatives should further reinforce customer loyalty and strengthen Costco’s ability to capture a larger share of household spending.
Costco’s expanding digital capabilities provide another compelling growth avenue as consumers increasingly prioritize convenience, faster fulfillment and seamless shopping experiences. The retailer is strengthening its omnichannel ecosystem through website and mobile application improvements, personalized product recommendations, and expanded delivery partnerships with Instacart, DoorDash and Uber Eats. These initiatives are helping attract younger shoppers and capture additional purchasing occasions beyond traditional warehouse visits. Digitally enabled sales exceeded $33 billion in fiscal 2026, growing more than 20%. Management indicated that third-party delivery sales are largely incremental, complementing rather than replacing warehouse purchases. Costco is also exploring opportunities in artificial intelligence-driven product discovery while improving online product visibility and customer engagement.
Costco’s expanding warehouse network and diversified ancillary businesses further strengthen its long-term growth prospects. The company ended fiscal 2026 with 939 warehouses worldwide and plans to open 33 locations in fiscal 2027, including five relocations. Its longer-term ambition of reaching approximately 30 net new warehouses annually highlights substantial opportunities across underserved U.S. markets and international regions. Alongside physical expansion, Costco continues to broaden its appeal through gasoline, pharmacy and travel services, which provide compelling reasons for members to engage more frequently with the brand. Management plans roughly $7.5 billion in fiscal 2027 capital expenditures, primarily supporting warehouse expansion and supply-chain improvements. These investments should strengthen Costco’s operating capabilities and support sustainable growth over the long term.
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 11.2% year to date compared with the industry’s rise of 8.4%. A sneak peek into key retail peers' performance reveals that shares of Dollar General have tumbled 4.7% during the same time frame, while Target has surged 57.1%.
Image Source: Zacks Investment Research
Despite Costco’s strong fundamentals, its premium valuation remains a key consideration for investors. The stock has commanded a premium multiple due to its consistency, brand strength and membership economics.
Costco's forward 12-month price-to-earnings ratio stands at 41.55, higher than the industry’s ratio of 27.76. However, it is trading below its 12-month median level of 44.79, indicating some moderation in valuation. Costco is trading at a premium to Target (with a forward 12-month P/E ratio of 15.78) and Dollar General (15.32).
Image Source: Zacks Investment Research
How Consensus Estimates Stack Up for Costco
The Zacks Consensus Estimate for Costco’s current fiscal-year sales and earnings per share implies year-over-year growth of 8.2% and 11.7%, respectively. For the next fiscal year, the consensus estimate indicates a 7.1% rise in sales and 9.1% growth in earnings.
Image Source: Zacks Investment Research
How to Play Costco Stock: Buy, Hold or Sell?
Costco’s strong September sales, loyal membership base, expanding digital capabilities and warehouse growth plans reinforce its long-term investment appeal. However, its premium valuation, intensifying competition and lingering cost pressures warrant a measured approach despite encouraging earnings growth expectations. Existing investors may consider holding their positions to benefit from Costco’s long-term growth prospects, while prospective investors should wait for a more attractive entry point before initiating positions.
Costco currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.