Costco Wholesale Corporation

NASDAQ Global Select
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Somewhat Bullish +50

Is Costco Stock a Buy on the Dip as Same-Store Sales Surge?

AI-generated analysis

📈 Costco reported fiscal Q3 revenue of $69.15 billion, representing an 11.6% year-over-year increase.

💰 Adjusted earnings per share rose 15% to $4.93 during the quarter ending May 10, 2026.

🛒 Same-store sales grew by 6.6% globally after adjusting for gasoline prices and foreign currency fluctuations.

📱 Digital revenue surged 21.5%, driven by a 37% increase in app and website traffic.

⛽ Gasoline volumes hit record levels for the quarter, contributing significantly to overall sales growth.

👥 Paid memberships increased 4.1% to reach 82.9 million households across all regions.

💳 Membership-fee revenue jumped 10.7% year over year to $1.37 billion in the quarter.

🔄 The company maintained a strong membership renewal rate of 92.2% in North America and 89.7% worldwide.

🏗️ Costco opened four new warehouse locations in the quarter with plans for 12 more openings this fiscal year.

📉 Despite strong fundamentals, the stock fell on earnings news despite being up 10% for the year.

💸 The stock currently trades at a forward P/E ratio of nearly 42x, significantly higher than Amazon and Walmart.

⚠️ Analysts suggest the high valuation may cap upside potential despite the company's recession-resistant nature.

📉 U.S. same-store sales increased by 6.8% adjusted, while Canadian comparables climbed by 6.2%.

🌍 Average transaction value rose 4.2% worldwide excluding gasoline and currency impacts.

🛒 Fresh food and nonfood items both achieved high-single-digit same-store growth rates.

Bullish Signals
  • Costco delivered outstanding results with fiscal Q3 revenue jumping 11.6% year over year to $69.15 billion.
  • Adjusted earnings per share increased 15% to $4.93, demonstrating strong profitability growth.
  • Same-store sales rose by 6.6% when adjusting for gasoline prices and foreign currency, with U.S. same-store sales increasing by 6.8%.
  • Digital revenue climbed 21.5%, driven by a 37% surge in app and website traffic.
  • Personalized recommendations helped bolster e-commerce sales by nearly $5 billion.
  • The company saw record gasoline volumes for a single quarter, contributing to overall sales strength.
  • Membership-fee revenue jumped 10.7% year over year to $1.37 billion.
  • Paid memberships rose by 4.1% to 82.9 million households, with higher-cost executive memberships jumping 9.6% to 41.2 million.
  • Costco's membership renewal rate was strong at 92.2% in North America and 89.7% worldwide.
  • The warehouse club opened four new locations in the quarter and expects to open 12 more this fiscal year for a total of 26 net new openings.
Risk Factors
  • The stock trades at a forward price-to-earnings ratio of nearly 42 times expected earnings for fiscal 2027, which is significantly higher than peers like Amazon (less than 28x) and Walmart (35x).
  • The high valuation may cap near-term upside, leading the author to advise against buying on the dip at this time.
Full Analysis
Costco Wholesale reported strong fiscal third-quarter results ending May 10, 2026, with revenue jumping 11.6% year over year to $69.15 billion and adjusted earnings per share increasing 15% to $4.93. The retailer's same-store sales rose by 6.6% when adjusting for gasoline prices and foreign currency, driven by robust e-commerce growth where digital revenue climbed 21.5% and app traffic surged 37%. Personalized recommendations contributed nearly $5 billion in e-commerce sales, while the company recorded record gasoline volumes for the quarter. Membership-fee revenue increased 10.7% to $1.37 billion, with paid memberships rising 4.1% to 82.9 million households and executive memberships growing 9.6% to 41.2 million. The membership renewal rate stood at 92.2% in North America and 89.7% worldwide, while the company opened four new warehouse locations in the quarter with plans for 12 more openings this fiscal year, bringing the total global count to 928 warehouses. Despite these operational successes, the article notes that Costco's stock trades at a forward price-to-earnings ratio of nearly 42 times expected earnings for fiscal 2027, which is significantly higher than peers like Amazon (less than 28x) and Walmart (35x). The analysis suggests that while Costco remains a solid long-term holding due to its consistency and recession-resistant nature, the high valuation may cap near-term upside, leading the author to advise against buying on the dip at this time. The report concludes by highlighting The Motley Fool Stock Advisor's current top 10 stock list, which does not include Costco, while noting that the firm holds positions in Amazon, Costco, and Walmart.