Alex Sirois
5 min read
Quick Read
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COST hit a fifth straight quarterly earnings beat, boosting shares 9% in a month, yet only 6% upside remains to the average analyst target of $1,068.
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U.S. renewal rates of 92% and free cash flow up 20% to $9.4 billion anchor the bull case despite a sky-high 48x trailing P/E.
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Costco (NASDAQ:COST) is a Hold at $1,005.16. The stock has gained 8.93% over the past month after a fifth consecutive quarterly beat, and that rally puts its premium valuation back under the microscope.
Costco runs 939 warehouses across 14 countries and territories, serves 150.4 million cardholders, and sells the Kirkland Signature private label. Fiscal 2026 revenue reached $303.15 billion, up 10.14%, with EPS of $20.76. Shares still trade below the $1,094.76 52-week high.
Sticky Memberships and Rising Estimates Power the Bull Case
Renewal rates reached 92.3% in the U.S. and Canada and 89.8% worldwide, while paid executive members grew 9.4% to 42.3 million. Digitally enabled comparable sales rose 19.5%, and free cash flow climbed 19.82% to $9.39 billion.
Analysts keep raising numbers. Fiscal 2027 EPS estimates drew 18 upward revisions versus 4 downward over 30 days, with consensus at $22.8083, roughly 9.9% growth. Costco plans 33 openings in fiscal 2027 and sees a path to roughly 30 new warehouses a year for the next five to ten years. The CFO added there is nothing that “prevents continued leverage if comps remain in the mid-single digits.”
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A 48x Multiple Leaves Little Margin for Error
Costco trades at a trailing P/E of 48, a forward P/E of 40, and a PEG ratio of 4.381. That pricing assumes perfect execution. Fourth-quarter EPS included a $0.15 per share nonrecurring tariff refund benefit, and management plans to reinvest most future refunds in prices, which complicates fiscal 2027 comparisons.
