One-glance verdict
Overvalued
$696.61 our estimate vs market $989.60
Wall Street consensus: $1,067.59 (53.3% higher than our fair-value estimate)
42% above our estimate, beyond the bull case
Fundamentals snapshot
Costco Wholesale Corporation
COST · NMS · Consumer Defensive · Discount Stores
Current price
$989.60
52-week range
$844.06 - $1,096.50
Market cap
$438.52B
Balance sheet
Healthy
80.59x Strong cushion
Net cash $11.12B. 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 10.1% last year.
- Reward Returns 28.4% on equity, ahead of 66% of its peers.
- Risk Stock trades 3.5% above its 5-year average P/E.
- Risk Insider ownership is only 0.1% (peer median: 0.6%).
What this company does
Costco Wholesale Corporation
Costco operates giant warehouse stores where customers must pay an annual fee to buy items in bulk, from groceries to electronics. A large portion of the company's profit comes directly from these membership fees, creating a stable and predictable income called recurring revenue (money that comes in at regular intervals). This model allows Costco to sell products with very thin profit margins (the slice of the sale price that is actual profit), which keeps prices low and encourages customers to renew their memberships.
How the company got here
Costco's story began with two separate companies: Price Club, which opened in 1976 in San Diego, and Costco, which opened in 1983 in Seattle. Both were built on the idea of a membership warehouse club, where customers pay an annual fee to shop for goods in bulk at low prices. The two companies were so successful with this model that they decided to merge in 1993, becoming Price/Costco. A few years later, in 1997, the company was renamed Costco Wholesale as we know it today, and it has since grown into one of the largest retailers in the world.
What it actually does
Costco operates a global chain of membership-only warehouses where you can buy a wide variety of products, often in large quantities. Think of it as a giant store where you can find everything from groceries, electronics, and furniture to tires and jewelry. The key is that you must be a member to shop there, and this membership fee is a crucial part of how the company makes money. By charging a fee to get in the door, Costco can sell its products at very low markups (the amount added to the cost of a product to determine its selling price), passing the savings on to its 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 a huge range of items, from fresh food and pantry staples to electronics, clothing, and household goods. While this is the biggest part of their sales, it's not where they make most of their profit. Costco intentionally keeps prices very low, with markups (the difference between what they pay for an item and what they sell it for) far smaller than typical retailers, to make the membership valuable for shoppers.
Membership Fees
This is Costco's secret sauce and where it makes most of its actual profit. Customers pay an annual fee for the privilege of shopping at the warehouses, which provides a steady and predictable stream of income for the company. Because the cost of signing up a member is very low, almost all of this fee money goes directly to the company's bottom line. This allows Costco to sell its merchandise at near-cost prices, which in turn encourages more people to become members and renew their memberships each year.
Ancillary Businesses
Inside its warehouses, Costco runs several other smaller businesses that bring in customers and additional revenue. These are called ancillary businesses and include services like gas stations, pharmacies, optical and hearing-aid centers, food courts, and tire shops. These services add convenience for members, encouraging them to visit the warehouse more often and spend more money while they are there. While not as large as merchandise sales, these businesses are an important part of the overall value Costco provides to its members.
What management is betting on now
Costco is focused on two main areas for future growth: expanding its physical footprint and improving its e-commerce business. The company plans to continue opening new warehouses both in the United States and internationally, aiming for about 30 new locations each year. At the same time, management is investing heavily in its online operations to make shopping on its website and app a better experience. This includes offering faster delivery options, improving the website, and using technology like AI (Artificial Intelligence) to personalize the online shopping experience for its members.
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
FY2026 Q4
$2.48B
Revenue
$95.72B
Net income
$3.00B
Diluted EPS
6.75
Operating cash flow
$4.68B
Free cash flow
$2.48B
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Sources
Revenue
$70.53B
Net income
$2.19B
Diluted EPS
4.93
Operating cash flow
$3.45B
Free cash flow
$2.04B
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Sources
Revenue
$69.60B
Net income
$2.04B
Diluted EPS
4.58
Operating cash flow
$3.00B
Free cash flow
$1.71B
Fetching…
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
Fetching…
Sources
Revenue
$63.72B
Net income
$1.79B
Diluted EPS
4.02
Operating cash flow
$2.75B
Free cash flow
$1.61B
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Sources
Revenue
$254.45B
Net income
$2.35B
Diluted EPS
5.28
Operating cash flow
$2.96B
Free cash flow
$1.38B
Fetching…
Sources
Is it cheap or expensive?
Fair value $696.61 vs current price $989.60
Wall Street consensus is the average analyst price target: $1,067.59 (53.3% higher than our fair-value estimate).
Our most-likely fair value is $696.61 a share — about 29.6% below today's price of $989.60, so the stock currently looks expensive (overvalued).
Is it drowning in debt?
Healthy
Net cash $11.1B - more cash than debt. Interest coverage 80.6x.
Net debt
$-11.12B
Interest coverage
80.59x
Costco Wholesale Corporation's profit covers its interest bill about 80.6 times over. which is stronger than every peer shown here.
Healthy
Worse cushion
Baseline
Better cushion
COST
BASELINE
Costco Wholesale Corporation
Total debt $10.18B Interest coverage 80.59x This is the baseline the peer rows are being compared against.
Total debt $75.09B Interest coverage 10.66x -87% vs COST Carries about 7.6x less debt cushion than COST.
Total debt $19.20B Interest coverage 11.50x -86% vs COST Carries about 7.0x less debt cushion than COST.
Total debt $2.77B Interest coverage 20.40x -75% vs COST Carries about 4.0x less debt cushion than COST.
Total debt $63.19B Interest coverage 8.66x -89% vs COST Carries about 9.3x less debt cushion than COST.
Total debt $24.16B Interest coverage 2.96x -96% vs COST Carries about 27.2x less debt cushion than COST.
What you should know
The case for and against COST
3 Rewards
2 Risks
Rewards
-
Revenue grew 10.1% last year.
-
Returns 28.4% on equity, ahead of 66% of its peers.
-
Free cash flow was positive in 10/10 years.
Risks
-
Stock trades 3.5% above its 5-year average P/E.
-
Insider ownership is only 0.1% (peer median: 0.6%).
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)
47.67x
Forward P/E
39.54x
P/B
12.25x
P/S
1.45x
EV/EBITDA
29.92x
PEG ratio
4.92x
Profitability
How much profit each dollar creates
Gross margin
12.8%
Operating margin
3.8%
Net margin
3.0%
ROE
28.4%
ROA
8.7%
Health
Liquidity and balance-sheet strength
Debt / equity
0.28x
Current ratio
1.06x
Quick ratio
0.57x
Total debt
$10.18B
Total cash
$21.30B
Growth
How the business has been compounding
Revenue TTM
$303.15B
Revenue 5Y CAGR
7.5%
EPS TTM
20.76
EPS 5Y CAGR
11.5%
Cash flow
How much cash the business throws off
Operating CF TTM
$15.82B
Free CF TTM
$9.38B
FCF margin
3.1%
Dividend
Shareholder payout
Yield
0.6%
Payout ratio
26.7%
Last ex-div date
2026-10-30