One-glance verdict
Overvalued
$560.06 our estimate vs market $951.89
Wall Street consensus: $1,076.91 (92.3% higher than our fair-value estimate)
70% above our estimate, beyond the bull case
Fundamentals snapshot
Costco Wholesale Corporation
COST · NMS · Consumer Defensive · Discount Stores
Current price
$951.89
52-week range
$844.06 - $1,096.50
Market cap
$422.14B
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 Stock trades 4.1% above its 5-year average P/E.
- Risk Insider ownership is only 0.2% (peer median: 0.6%).
What this company does
Costco Wholesale Corporation
Costco operates huge warehouse stores where you must pay an annual fee to become a member and shop. While it sells everything from groceries to electronics, the company makes most of its profit from these membership fees, which provide a stable form of recurring revenue (income that is predictable and likely to continue in the future). This business model allows Costco to keep prices on its goods extremely low, which keeps customers loyal and happy to renew their memberships each year.
How the company got here
Costco's story began with two separate companies: Price Club, which opened the first membership-only warehouse in San Diego in 1976, and Costco, which opened its first warehouse in Seattle in 1983. Initially, Price Club only served small businesses, but soon found that including non-business members gave them much greater buying power. The two companies were so successful with this new warehouse club model that they merged in 1993, combining their strengths to become the world's most successful warehouse club. The core idea has always been simple: keep business costs low and pass those savings directly on to members.
What it actually does
Costco operates a global chain of membership-only warehouses where customers pay an annual fee to shop. In these large, no-frills stores, you can find a wide variety of products, often sold in bulk, from groceries and fresh food to electronics, clothing, and furniture. The company focuses on selling high-quality, brand-name merchandise as well as its own popular private-label brand, Kirkland Signature. Beyond the items on the shelves, Costco also offers services like gas stations, pharmacies, optical centers, and even travel services to its members.
Merchandise Sales
The vast majority of Costco's revenue (the total money it brings in) comes from selling products in its warehouses and online. This includes everything from fresh meat and produce to electronics and clothing. However, Costco's strategy is to sell these items at very low markups, meaning they don't make a large profit on each individual item sold. The low prices are designed to provide great value, which in turn encourages people to become and remain members.
Membership Fees
While merchandise sales make up most of the revenue, the annual fees that members pay are the main driver of Costco's profit (the money left over after all expenses are paid). This is a key difference from traditional retailers who make most of their profit from marking up the price of their products. Because the membership fees provide a steady and predictable stream of income, Costco can afford to sell its merchandise at close to its own cost. The high rate at which members renew their memberships each year shows how much they value the savings they get from shopping at Costco.
Ancillary Businesses
Costco also generates a significant portion of its sales from what it calls ancillary businesses, which are the other services offered to members, often in or near the warehouses. These include gas stations, pharmacies, optical and hearing-aid centers, and food courts. These services are designed to provide additional value to the membership and encourage members to visit the warehouses more frequently. While some of these, like the gas stations, operate on very thin profit margins (the percentage of revenue kept as profit), they are very effective at drawing customers to the stores.
What management is betting on now
Costco's current focus is on steady and sustainable growth by expanding its physical footprint and enhancing its digital presence. The company plans to open dozens of new warehouses each year, with a roughly even split between locations in the U.S. and international markets. Management is also investing in its e-commerce (online shopping) capabilities to provide members with more convenience and a wider selection of products. A key part of their strategy remains the expansion of their popular and high-quality private label brand, Kirkland Signature, which helps to build customer loyalty and offers great value.
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
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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
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Sources
Is it cheap or expensive?
Fair value $560.06 vs current price $951.89
Wall Street consensus is the average analyst price target: $1,076.91 (92.3% higher than our fair-value estimate).
Our most-likely fair value is $560.06 a share — about 41.2% below today's price of $951.89, 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 $75.55B Interest coverage 10.66x -84% vs COST Carries about 6.3x less debt cushion than COST.
Total debt $19.27B Interest coverage 11.50x -83% vs COST Carries about 5.9x less debt cushion than COST.
Total debt $2.86B Interest coverage 20.40x -70% vs COST Carries about 3.3x less debt cushion than COST.
Total debt $63.73B Interest coverage 8.66x -87% vs COST Carries about 7.8x less debt cushion than COST.
Total debt $24.19B 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
-
Stock trades 4.1% above its 5-year average P/E.
-
Insider ownership is only 0.2% (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)
47.95x
Forward P/E
42.03x
P/B
25.53x
P/S
1.44x
EV/EBITDA
30.49x
PEG ratio
4.73x
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
19.85
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
0.6%
Payout ratio
27.0%
Last ex-div date
2026-07-24