One-glance verdict
Overvalued
$523.70 our estimate vs market $918.91
Wall Street consensus: $1,072.20 (104.7% higher than our fair-value estimate)
75% above our estimate, beyond the bull case
Fundamentals snapshot
Costco Wholesale Corporation
COST · NMS · Consumer Defensive · Discount Stores
Current price
$918.91
52-week range
$844.06 - $1,096.50
Market cap
$407.52B
Balance sheet
Healthy
67.42x Strong cushion
Net cash $898.00M. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
2 Risks
3 rewards · 2 risks
- Reward Revenue grew 6.7% last year.
- Reward Returns 29.2% on equity, ahead of 66% of its peers.
- Risk Insider ownership is only 0.2% (peer median: 0.6%).
- Risk Stock trades 0.3% above its 5-year average P/E.
What this company does
Costco Wholesale Corporation
Costco is a members-only warehouse that sells a wide variety of items in bulk, from groceries and electronics to gasoline. The company intentionally keeps product prices very low, which means its profit margin (the small amount of profit earned on each item sold) is very thin. Instead, Costco makes most of its money from the annual membership fees customers pay to shop there, which provides a steady and predictable stream of income.
How the company got here
Costco's story began with two separate companies: Price Club, which opened in a converted airplane hangar in San Diego in 1976, and Costco, which opened its first warehouse in Seattle in 1983. Both companies had a similar idea: sell a limited number of items in bulk to members at very low prices. In 1993, the two companies merged to become PriceCostco, and later just Costco Wholesale Corporation. This combination created a more powerful company that has since grown into a global retail giant with hundreds of locations worldwide.
What it actually does
Costco is a membership-only warehouse club where you pay an annual fee to shop. Inside, you'll find a wide variety of products, from groceries and electronics to furniture and jewelry, often sold in large, bulk packaging. The company's goal is to offer high-quality, brand-name merchandise at prices substantially lower than you'd find in typical retail stores. They keep prices low by having a no-frills warehouse environment and by limiting the number of different items they sell, which allows them to buy in huge quantities and pass the savings on to their members.
Merchandise Sales
The vast majority of Costco's revenue (the total money it brings in) comes from selling physical products in its warehouses and online. This includes everything from fresh food and pantry staples to electronics, clothing, and household goods. While this is the biggest part of their business in terms of sales dollars, Costco intentionally keeps its profit margins (the amount of profit made on each sale) very low, often marking up items by no more than 14-15%. This strategy of low prices is designed to attract and retain members, who are the company's other major source of income.
Membership Fees
A much smaller, but very important, part of Costco's business is the annual fee that customers pay to be members. While these fees make up only a small fraction of total revenue, they account for a very large portion of the company's profit (the money left over after all expenses are paid). This steady stream of income from memberships allows Costco to sell its merchandise at very low prices, which in turn encourages members to renew their memberships each year. There are different tiers of membership, such as Gold Star for individuals and Executive, which offers additional benefits.
Ancillary Businesses
Costco also operates several other businesses within or alongside its warehouses that provide additional services and encourage members to visit more often. These include gas stations, pharmacies, optical and hearing aid centers, food courts, and travel services. These services are a key part of the company's strategy to offer more value to its members and make the Costco membership even more useful. While not as large as their main retail sales, these ancillary (or extra) businesses are a significant and growing part of the company.
What management is betting on now
Costco's current focus is on steady, continued growth by expanding its number of physical warehouse locations, both in the United States and internationally. They are also investing in their e-commerce (online shopping) business to provide a better digital experience for members. Additionally, the company is continuously developing its own private-label brand, Kirkland Signature, to offer high-quality products at even more competitive prices. A key part of their strategy is to maintain high membership renewal rates by consistently providing value, which they believe will lead to long-term success.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2025 Q1
$1.38B
FY2025 Q2
$1.61B
FY2025 Q3
$2.33B
FY2025 Q4
$1.90B
FY2026 Q1
$3.16B
FY2026 Q2
$1.71B
FY2026 Q3
$2.04B
Revenue
$70.53B
Net income
$2.19B
Diluted EPS
4.93
Operating cash flow
$3.45B
Free cash flow
$2.04B
Fetching…
Sources
Revenue
$69.60B
Net income
$2.04B
Diluted EPS
4.58
Operating cash flow
$3.00B
Free cash flow
$1.71B
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Sources
Revenue
$67.31B
Net income
$2.00B
Diluted EPS
4.50
Operating cash flow
$4.69B
Free cash flow
$3.16B
Fetching…
Sources
Revenue
$86.16B
Net income
$2.61B
Diluted EPS
5.87
Operating cash flow
$3.87B
Free cash flow
$1.90B
Fetching…
Sources
Revenue
$63.20B
Net income
$1.90B
Diluted EPS
4.28
Operating cash flow
$3.46B
Free cash flow
$2.33B
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Sources
Revenue
$63.72B
Net income
$1.79B
Diluted EPS
4.02
Operating cash flow
$2.75B
Free cash flow
$1.61B
Fetching…
Sources
Revenue
$254.45B
Net income
$2.35B
Diluted EPS
5.28
Operating cash flow
$2.96B
Free cash flow
$1.38B
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Sources
Is it cheap or expensive?
Fair value $523.70 vs current price $918.91
Wall Street consensus is the average analyst price target: $1,072.20 (104.7% higher than our fair-value estimate).
Our most-likely fair value is $523.70 a share — about 43.0% below today's price of $918.91, so the stock currently looks expensive (overvalued).
Is it drowning in debt?
Healthy
Net cash $898.0M - more cash than debt. Interest coverage 67.4x.
Net debt
$-898.00M
Interest coverage
67.42x
Costco Wholesale Corporation's profit covers its interest bill about 67.4 times over. which is stronger than every peer shown here.
Healthy
Worse cushion
Baseline
Better cushion
COST
BASELINE
Costco Wholesale Corporation
Total debt $10.23B Interest coverage 67.42x This is the baseline the peer rows are being compared against.
Total debt $75.09B Interest coverage 10.66x -84% vs COST Carries about 6.3x less debt cushion than COST.
Total debt $19.20B Interest coverage 11.50x -83% vs COST Carries about 5.9x less debt cushion than COST.
Total debt $2.77B Interest coverage 20.40x -70% vs COST Carries about 3.3x less debt cushion than COST.
Total debt $63.19B Interest coverage 8.66x -87% vs COST Carries about 7.8x less debt cushion than COST.
Total debt $24.16B Interest coverage 2.96x -96% vs COST Carries about 22.8x less debt cushion than COST.
What you should know
The case for and against COST
3 Rewards
2 Risks
Rewards
-
Revenue grew 6.7% last year.
-
Returns 29.2% on equity, ahead of 66% of its peers.
-
Free cash flow was positive in 10/10 years.
Risks
-
Insider ownership is only 0.2% (peer median: 0.6%).
-
Stock trades 0.3% above its 5-year average P/E.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
46.18x
Forward P/E
40.61x
P/B
24.65x
P/S
1.39x
EV/EBITDA
29.43x
PEG ratio
4.43x
Profitability
How much profit each dollar creates
Gross margin
12.9%
Operating margin
3.7%
Net margin
3.0%
ROE
29.2%
ROA
8.7%
Health
Liquidity and balance-sheet strength
Debt / equity
0.60x
Current ratio
1.07x
Quick ratio
0.56x
Total debt
$10.23B
Total cash
$11.13B
Growth
How the business has been compounding
Revenue TTM
$293.59B
Revenue 5Y CAGR
8.9%
EPS TTM
19.90
EPS 5Y CAGR
11.5%
Cash flow
How much cash the business throws off
Operating CF TTM
$15.00B
Free CF TTM
$7.84B
FCF margin
2.7%
Dividend
Shareholder payout
Yield
0.7%
Payout ratio
27.0%
Last ex-div date
2026-07-24