If You'd Invested $10,000 in Costco 10 Years Ago, Here's How Much You'd Have Today

Ten years ago, Costco Wholesale (NASDAQ: COST) traded around $155 a share. If you had put $10,000 into the membership-based retailer back then and reinvested every dividend along the way, you would be sitting on about $72,000 today. That is more than seven times your money, or an average of about 22% a year -- the kind of compounding most investors only dream about, and it came from a warehouse-club stock.

So, what produced that result? And can the next decade for Costco stock come anywhere close?

Image source: Getty Images.

The compounding engine

Costco's returns don't come from a flashy product cycle. They come from a business model that quietly compounds, and the heart of it is the membership fee. Customers pay an annual fee simply for the right to shop, which hands Costco a stream of high-margin, recurring income and a powerful incentive to keep prices low so members feel they are getting their money's worth.

The business model ultimately creates a flywheel. Low prices drive traffic and loyalty, loyalty drives membership renewals, and renewals help fund still-lower prices.

Further, Costco's renewal rates sit around 90%, and the model has proved remarkably durable across economic cycles.

And the growth hasn't slowed. In its fiscal third quarter (the period ended May 10, 2026), Costco's net sales rose 11.6% year over year to $69.2 billion. Its monthly figures have run even hotter lately. For the retail month of May, net sales climbed 14.5%, with comparable sales -- a measure of revenue at locations open at least a year -- up 12.5%, and digitally enabled comparable sales up 21.1%. For a retailer this size to still post double-digit growth, well into its fifth decade as a public company, is impressive.

And there is still room to grow. Costco keeps opening new warehouses every year, and the bulk of its locations remain in North America, leaving markets across Asia and Europe relatively underpenetrated. Earnings are compounding alongside sales -- net income rose about 10% in fiscal 2025 -- and the membership fee gives the company a lever it can pull every few years. The debate around the stock isn't about whether Costco keeps growing. It is about the price you pay to own that growth.

Can it happen again?

The hard part for anyone buying today is understanding what actually drove those returns. That 22%-a-year gain came partly from Costco's growth and partly from investors, over the decade, deciding to pay an ever-higher price for that growth. Ten years ago, the stock traded at a price-to-earnings ratio in the high 20s. Today, it fetches about 48 times earnings.

That rerating did a lot of the heavy lifting, and it can't repeat forever. For the stock to return 22% a year again, investors a decade from now would have to pay something like 70 or 80 times earnings on top of continued strong growth. That is a stretch, and it is the crux of the problem with buying at today's price.

None of which makes Costco a bad business. It is one of the best retailers on the planet, membership renewals give it unusual visibility into future revenue, and at about 13% below its 52-week high, the stock isn't quite as pricey as it was a few months ago. The risk isn't that the business breaks. It is that a stock priced at 48 times earnings has almost no cushion, so even a modest slowdown -- a soft patch in comparable sales, or sharper competition from Amazon or Walmart's Sam's Club -- could pull the valuation multiple down even as the company keeps performing.

But at nearly 48 times earnings, I don't think today's buyers should expect a repeat of the last decade. Costco will very likely keep growing, keep nudging up its membership fee, and keep rewarding patient shareholders -- just probably at a more ordinary pace from this starting valuation. If you already own it, that is a fine reason to hold on. If you are looking to buy, history suggests the returns tend to be far better when you catch this stock on a meaningful pullback. And 13% off the high isn't quite that. Personally, I would keep it on my watch list and wait for a better price.

Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Costco Wholesale, and Walmart. The Motley Fool has a disclosure policy.