5 Things Investors Need to Know About Costco This Week

Key Points

• Costco beat on sales and earnings in the fourth quarter.

• It's investing in digital channels and resonating with younger members.

• Costco stock is expensive and can't handle any missteps.

• 10 stocks we like better than Costco Wholesale ›

Costco Wholesale (NASDAQ: COST) is known for being a perpetual market beater, but Costco stock is actually lagging the market this year, up only 3% while the S&P 500 is up 13%. The market gave the company's latest results a mediocre reception despite coming in ahead of forecasts for both sales and earnings and management giving an upbeat feeling about the future.

Has Costco's sheen finally worn off? Here are five things you need to know right now if you're considering buying Costco stock.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Image source: Getty Images.

1. It's thriving in a tough market

Costco is known and loved for its rock-bottom prices. It has a fee-based model that generates consumer loyalty, with high renewals and high sales as customers try to get the most bang for their membership buck. Since Costco makes money from the membership fees, it keeps the product prices as low as possible, and it just celebrated its 40th year of its famous $1.50 hot dog.

Sales increased 8% year over year in the 2025 fiscal fourth quarter (ended Aug. 31) to $84.4 billion, with a 5.7% increase in comparable sales (comps) and a 13.6% increase in e-commerce sales. Earnings per share (EPS) were $5.87, up from $5.29 last year. Costco beat analyst expectations on the top and bottom lines.

Management admitted that it's had to navigate the tariff changes, since about a third of its merchandise comes from abroad. In some cases, it has expanded its Kirkland Signature line of products to substitute for products affected by tariffs. This isn't the first time Costco has had to manage through a tough economic environment, and it's well positioned to handle the challenge. Not too long ago, it bought a fleet of ships to literally navigate around blocked supply lines, and it has plenty of tools in its arsenal to deal with challenges as they arise.

2. It has plenty of growth opportunities

Costco is the third-largest retailer in the U.S. behind Walmart and Amazon, but it still has fewer than 1,000 stores worldwide, trailing many chains that don't make as much sales as it does.

It currently has 914 stores in total, with 629 in the U.S., 110 in Canada, and the rest throughout countries across the globe. It opened 24 stores in fiscal 2025, a much lower rate than other chains. Each of Costco's huge warehouses makes a lot more per unit on average than other retailers, so it can enjoy high sales from new stores and still keep the runway long. It's planning to accelerate store openings in 2026 to 35.

It's also boosting sales and engagement by offering new products and attracting new members, ensuring growth for years to come.

3. It's resonating with a younger crowd

Not only is Costco attracting new members, but it's attracting younger members, which is key to driving future growth. The company is investing in digital channels and digital features to appeal to younger members and stay relevant in a technologically changing climate. It now offers online registration, and almost half of new signups are under age 40.

It's focusing on digital communications, and site traffic was up 27% over last year in the fourth quarter. It's working on delivering a home page experience that's tailored with consumer personalization, and that also feeds into its paid media strategy. In one recent campaign, digital ads drove a 45% increase in sales of the promoted items.

As opposed to going all in for e-commerce, which doesn't suit its business model, Costco is concentrating its efforts on big and bulky items, which is cost-effective for its logistics network.

4. Wall Street sees a healthy upside

As Costco stock stagnates, Wall Street's target price remains out of reach. The average analyst target price is 15% higher than today's price, with a high that's a 30% gain.

There are reasons the market is wary of Costco stock today, in an unusual break from its more typical love of the stock. The environment continues to be unfriendly, and the future is uncertain. Tariffs are weighing on it, and comps growth is slowing.

Long term, Costco should be the reliable market-beating stock is has been for decades as it opens new stores and gains new, younger members.

5. It's expensive

Another reason the stock is imploding under the weight of the economy is its valuation. It's priced for perfection, which means it can't handle any missteps. Any market worries are going to send the stock down, and that's what happened after the fourth-quarter results were released, despite the revenue and earnings beats.

At its recent price, Costco stock traded at a P/E ratio of 53, which is still historically high for it and still packs in a premium.

If you're on the fence about Costco stock, now is as good a time as any for long-term investors to take a position. However, be aware that it may be a bumpy right in the near term, and there still may come a more attractive entry point.

Should you invest $1,000 in Costco Wholesale right now?

Before you buy stock in Costco Wholesale, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Costco Wholesale wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $652,872!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,092,280!*

Now, it’s worth noting Stock Advisor’s total average return is 1,062% — a market-crushing outperformance compared to 189% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of September 22, 2025

Jennifer Saibil has positions in Walmart. The Motley Fool has positions in and recommends Amazon, Costco Wholesale, and Walmart. The Motley Fool has a disclosure policy.