TLDRs:
- Costco Q1 FY2026 beats revenue and EPS expectations modestly.
- Digital sales surge 20.5%, boosting omnichannel growth prospects.
- Stock remains muted after-hours, reflecting elevated expectations.
- Membership strength and global expansion remain key long-term drivers.
Costco Wholesale Corporation (NASDAQ: COST) delivered its fiscal first-quarter 2026 results after the closing bell on Thursday, December 11, 2025.
The company posted strong revenue and earnings per share, meeting or modestly exceeding market expectations. Despite this, Costco’s after-hours trading remained relatively subdued, with the stock moving only marginally before the market opens on Friday, December 12. Analysts and investors are now focusing on membership growth, digital expansion, and long-term capital allocation as key drivers for the stock’s performance in the months ahead.
Costco Wholesale Corporation, COST
Earnings Beat But Market Reaction Muted
Costco reported total revenue of approximately $67.31 billion, up 8.3% year over year, and net sales of $65.98 billion, representing an 8.2% increase. Membership fees rose 14% to $1.33 billion, reflecting the resilience of its subscription-based revenue model. Net income climbed to $2.0 billion, with diluted EPS reaching $4.50, comfortably above the $4.28 consensus.
Despite this strong performance, after-hours trading showed only a modest dip of 0.18%–0.3% from the regular session close at $884.48. Market observers suggest the muted reaction is largely due to pre-existing elevated expectations and Costco’s premium valuation. Over the past year, the stock has lagged behind peers and the broader market, trading roughly 10–11% below its 52-week high.
Digital Growth Drives Momentum
One of the most notable aspects of Costco’s Q1 results was digitally enabled sales, which surged 20.5% year over year. This growth reflects the company’s ongoing investments in e-commerce infrastructure and partnerships with delivery platforms like Instacart, Uber Eats, and DoorDash.
Analysts note that digitally enabled revenue is becoming an increasingly important metric, providing a clearer view of Costco’s omnichannel footprint.
Costco’s digital initiatives have helped offset slower physical store comps in certain regions, while also boosting engagement among Executive and online membership tiers. Management emphasized that future reports will track digital growth more closely, signaling its significance in long-term strategic planning.
Margins, Membership, and International Expansion
Operating income rose to $2.46 billion, up from $2.20 billion in the prior year, supported by efficient cost management despite rising labor expenses and tariff pressures. The company’s membership base remains a critical revenue engine, with renewal rates still above 90% and Executive memberships growing 9.3% year over year.
Globally, Costco operates 923 warehouses, including 633 in the U.S. and Puerto Rico, with expansion plans continuing across Canada, the U.K., Mexico, Korea, Taiwan, Japan, and Australia. Capital expenditures reached $5.5 billion in FY2025 and are expected to grow further in FY2026, funding new warehouses, remodels, and supply chain enhancements.
Wall Street Perspective and Pre-Market Focus
Analyst sentiment remains generally bullish, with a “Moderate Buy” consensus and an average price target near $1,092, implying 20–25% upside. While valuation concerns persist, Costco trades at a forward P/E near 44, well above the sector average, investors are encouraged by the company’s balance sheet strength, steady membership growth, and expanding digital footprint.
For Friday’s market open, traders will closely monitor pre-market activity around the $870–$900 range, analyst commentary on membership and margins, and any updated guidance from management regarding capital returns or digital initiatives.
Bottom Line
Costco delivered exactly what shareholders expected, strong revenue, EPS growth, and digital momentum. While the stock’s high valuation limits immediate upside, investors are keeping a keen eye on membership performance, global expansion, and e-commerce initiatives as the key levers for sustaining long-term growth.
Friday’s market session may reveal whether this solid quarter is enough to reignite momentum for the stock or maintain its current plateau.
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