One-glance verdict
Overvalued
$532.25 our estimate vs market $986.68
Wall Street consensus: $1,082.33 (103.4% higher than our fair-value estimate)
85% above our estimate, beyond the bull case
Fundamentals snapshot
Costco Wholesale Corporation
COST · NMS · Consumer Defensive · Discount Stores
Current price
$986.68
52-week range
$844.06 - $1,096.50
Market cap
$437.57B
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 8.0% 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 giant warehouse stores where members pay an annual fee to buy everything from groceries to gasoline in bulk. This membership fee is the key to its business, as it provides most of the company's profit and creates a steady, predictable income stream. This allows Costco to sell its products at very low prices, which keeps its millions of members loyal and coming back to shop.
How the company got here
Costco's story begins with two separate companies: Price Club, which opened the first membership-only warehouse in 1976, and Costco, which opened its first warehouse in 1983. Initially, Price Club only served small businesses, but soon opened its doors to non-business members, setting the stage for the warehouse club industry's growth. The two companies were so similar that they decided to merge in 1993, becoming PriceCostco. In 1997, the company was renamed Costco Wholesale Corporation and has since grown into a global retail giant.
What it actually does
Costco operates a chain of membership-only warehouses where customers, known as members, pay an annual fee to shop. In these large, no-frills stores, Costco sells a wide variety of items, often in bulk, at low prices. You can find everything from groceries, electronics, and furniture to clothing and jewelry. A key to their low prices is a limited selection of about 4,000 items, compared to the 30,000 at a typical supermarket, which allows them to buy in huge quantities and pass the savings to members.
Membership Fees
The core of Costco's business model is the annual membership fee that customers pay to be able to shop in the warehouses. While these fees make up a very small portion of the company's total sales, they account for the vast majority of its profit. This allows Costco to sell its products at very low markups (the difference between what they pay for an item and what they sell it for), sometimes barely breaking even on the merchandise itself. The consistent income from membership fees gives the company a stable financial foundation.
Merchandise Sales
This is the most visible part of Costco's business, representing the money earned from selling all the products in its warehouses. This is broken down into several large categories. The biggest is Food and Sundries, which includes pantry staples and other everyday items, followed by Non-Foods like electronics and clothing, and then Fresh Foods like meat and produce. While merchandise sales make up the vast majority of Costco's revenue (the total money coming in), the profit margin (the portion of the sale price that is actual profit) on these items is kept intentionally low to offer the best possible prices to members.
Warehouse Ancillary Businesses
These are the other businesses located within or next to the warehouses that encourage members to visit more often. This includes gas stations, pharmacies, optical and hearing-aid centers, and food courts. These services provide extra value to the Costco membership and are a significant source of revenue for the company. For example, the gasoline business alone makes up a noticeable portion of total sales.
What management is betting on now
Costco's current focus is on expanding its physical footprint by opening new warehouses, both in the U.S. and internationally, to reach more customers. They are also investing in their e-commerce (online shopping) capabilities to provide more convenience and a wider selection of products. Another key priority is growing their own private-label brand, Kirkland Signature, which offers high-quality products at lower prices than national brands, further strengthening member loyalty.
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
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
Fetching…
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 $532.25 vs current price $986.68
Wall Street consensus is the average analyst price target: $1,082.33 (103.4% higher than our fair-value estimate).
Our most-likely fair value is $532.25 a share — about 46.1% below today's price of $986.68, 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 $24.69B 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 8.0% 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)
49.76x
Forward P/E
43.61x
P/B
26.47x
P/S
1.49x
EV/EBITDA
31.61x
PEG ratio
4.82x
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
19.83
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
2026-05-01