TLDR
- Costco beat Q4 earnings at $5.87 per share vs $5.80 expected, revenue hit $86.2 billion
- Same-store sales grew 5.7%, missing 5.9% forecast and below prior year’s 6.9% growth
- Stock down 0.9% premarket despite earnings beat, up only 3% year-to-date vs S&P 500’s 12%
- Membership income surged 14%, e-commerce same-store sales climbed 13.6% year-over-year
- Bank of America maintains Buy rating with $1,095 price target on COST stock
Costco Wholesale Corporation delivered solid fourth-quarter results that exceeded Wall Street earnings expectations. However, investors focused on slower same-store sales growth that has become a concerning trend for the warehouse retailer.
The company reported adjusted earnings of $5.87 per share for the quarter ended August 31. This beat analysts’ consensus estimate of $5.80 per share, marking another quarter of outperformance.
Revenue reached $86.2 billion, slightly ahead of the $86 billion projection. The results demonstrate Costco’s ability to continue driving customer traffic and spending across its warehouse locations.
Same-store sales increased 5.7% year-over-year but fell short of the 5.9% forecast. This metric tracks sales growth at locations open for more than one year and serves as a key indicator of organic business growth.
The 5.7% same-store sales growth represents a deceleration from the 6.9% increase posted in the same quarter last year. This marks the second consecutive quarter where Costco’s same-store sales have missed analyst expectations.
COST stock traded 0.9% lower in premarket trading at $935.04 following the earnings release. The shares have gained just 3% year-to-date through Thursday’s close, lagging the S&P 500’s 12% advance.
Premium Valuation Creates High Expectations
Costco stock currently trades at 47 times forward earnings estimates. While this multiple has declined from earlier 2025 peaks, it remains elevated compared to historical averages and other retail sector stocks.
The premium valuation reflects investor confidence in Costco’s business model and market share gains. However, it also creates little room for disappointment when quarterly metrics come in below expectations.
Several positive trends emerged from the quarterly report. Membership income grew 14% from the previous year, with approximately half the increase attributable to last year’s membership fee hike.
E-commerce performance stood out with online same-store sales rising 13.6% year-over-year. Categories including gold, jewelry, housewares, and apparel drove double-digit online growth percentages.
Strategic Initiatives Drive Member Engagement
Costco’s extended shopping hours for Executive members have generated measurable results. Since late June, Executive members who pay double the standard annual fee can shop one hour before regular opening time.
CEO Ron Vachris reported this policy has boosted weekly U.S. sales by approximately 1% since implementation. The early shopping hour reduces peak-time congestion while encouraging membership tier upgrades.
The company opened 27 new warehouses during fiscal 2025 and plans to add another 35 locations in fiscal 2026. This expansion strategy supports Costco’s goal of increasing its global market presence.
Bank of America analyst Robert Ohmes maintained his Buy rating on COST stock with a $1,095 price target. Ohmes cited strong financial performance and strategic initiatives as reasons for his bullish outlook on shares.
