Is Costco Stock a Buy as Sales Continue to Sizzle?

Costco Wholesale (NASDAQ: COST) continues to roll along, with the warehouse club retailer once again reporting stellar sales growth, this time with its fiscal 2026 second-quarter results. The stock has had a good start to the year, trading up more than 17% in 2026, but it is up just 4.7% over the past year.

Let's take a closer look at the retailer's results (for the quarter ending Feb. 15, 2026) and prospects to see if the stock is a buy.

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Costco sales continue to sizzle

Costco once again delivered a strong quarter, led by robust e-commerce sales. Digital revenue soared 22.6%, with traffic jumping 32% and average order value up 15%. App traffic, meanwhile, surged 63%. The company credited a more personalized marketing and shopping experience for the growth

Overall, the company's fiscal Q1 revenue increased 9% year over year to $68.31 billion, and adjusted earnings per share (EPS) rose 14% to $4.58. Same-store sales climbed by 6.7% when adjusting for changes in gasoline prices and foreign currency. U.S. same-store sales increased by 6.4% (adjusted), while Canadian comparable-store sales jumped 7.6% (adjusted). Other international same-store sales climbed by 7.1% (adjusted).

Excluding gasoline and currency impacts, Costco's average transaction rose 3.5% worldwide and 3.9% in the U.S., while traffic grew by 3.1% worldwide and 2.4% in the U.S. The company noted that it saw strong double-digit growth in both its pharmacy and food court businesses. It also continues to lean into its private label brand, Kirkland Signature, launching 30 new items in the quarter.

Membership-fee revenue climbed 13.6% year over year in the quarter to $1.36 billion. Paid memberships rose by 4.8% to 82.1 million paid households, while higher-cost executive memberships jumped by 9.5% to 40.4 million. The company also benefited from a membership fee increase from September 2024. Costco's membership renewal rate was 92.1% in North America and 89.7% worldwide, similar to recent quarters.

The warehouse club opened three new locations in the quarter and expects to open 18 more this fiscal year for a total of 28 new net openings. It now has 924 warehouses around the globe. It plans to open 30 or more warehouse stores a year in the coming years.

Is the stock a buy?

There is no denying that Costco has been one of the best retailers around, with its sales stronger than those of other big box competitors, including Walmart and Target. However, the stock is pricey, trading at a forward price-to-earnings ratio (P/E) of nearly 49, and the company will no longer see a boost from its prior membership fee increase.

For my money, I would much prefer to own Amazon (NASDAQ: AMZN), which is trading at nearly half of Costco's valuation while growing its retail business more quickly (10% in North America and 17% internationally) and seeing great operating leverage to boot. It's just hard to see Costco having much more upside in the near to medium term from here.

Geoffrey Seiler has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Costco Wholesale, Target, and Walmart. The Motley Fool has a disclosure policy.