Costco Beat on Earnings. About $0.15 a Share of It Was a One-Time Tariff Refund.

Costco Wholesale (NASDAQ:COST) posted its fiscal fourth-quarter results after the closing bell on Thursday, and at first glance they looked great. Earnings per share rose 15% year over year to $6.75, and total revenue climbed 11% to $95.7 billion. Both numbers beat what analysts expected.

But one line in the earnings release is worth a closer look. The quarter had a non-recurring boost of $0.15 per diluted share from tariff refunds -- money Costco got back after the Supreme Court ruled in February that President Donald Trump's emergency tariffs were illegal.

This benefit was around 2% of the quarter's earnings per share -- small, but not nothing for a stock trading at over 40 times earnings.

Image source: Getty Images.

What did Costco earn without the refund?

Take the $0.15 out, and earnings per share are $6.60 for the fiscal fourth quarter (the 16 weeks ended Aug. 30, 2026). That's still up around 12% from $5.87 in the year-ago quarter, and net income excluding the benefit rose by a similar 12.3%.

The adjusted number also still came in just over analysts' consensus estimate, so the beat stands.

But I'd say Costco's own recent pace is the better comparison. Earnings per share rose 13.9% in the fiscal second quarter and 15.2% in the fiscal third quarter, when Costco got a slight boost from lapping a one-time employee-related charge from the year before. Adjusted for the refund, fourth-quarter growth eased to around 12%, only slightly above the 11.2% rise in net sales.

The refunds themselves were $184 million in the quarter, including $10 million in interest, chief financial officer Gary Millerchip said on the earnings call. Costco reinvested part of that money in lower prices for members, so the net benefit was $0.15 a share. Every batch of refunds is a one-time item, but this wasn't the last batch. Millerchip said Costco has already gotten a similar amount of refunds in the first quarter of fiscal 2027 and plans to reinvest most of what it gets.

Healthy comparable sales

Costco's comparable sales, which track growth at warehouses and e-commerce sites open for over a year, climbed 9.4% in the quarter. Of course, higher gas prices lifted the number, but currency shifts were a small drag. Excluding both, comparable sales climbed 6.7%, roughly matching the 6.6% adjusted rate for the fiscal third quarter.

Better yet, comparable traffic climbed 3.3% worldwide, up from 2.4% for the previous quarter. In other words, members were shopping more often, not just spending more on gas.

Margins helped less. Costco's gross margin was 11.02% of net sales, down from 11.13% a year ago. Excluding gas prices, gross margin climbed 0.20 percentage points -- but almost half of that gain came from the refund.

The sales line carried the quarter mainly on its own.

Membership fee growth keeps slowing

Membership fee income came to $5.9 billion in fiscal 2026, around half of Costco's $11.7 billion in operating income, so small shifts in its growth rate matter.

For the fiscal fourth quarter, fee income climbed 7.3% year over year to $1.85 billion. It was the latest in a steady step down over the fiscal year: Growth was 14% for the first quarter, 13.6% for the second, and 10.7% for the third.

Costco hiked its U.S. and Canada membership fees in September 2024, and Millerchip said the fourth quarter was the last one to get a year-over-year lift from that increase. Excluding the fee increase and currency, fee income grew 6.8%, helped by more executive members and more base members.

That's still solid growth. But it suggests fee income may grow at a high-single-digit rate from here, not the double-digit rate investors got used to.

At 43 times earnings, the price is still steep

Overall, Costco's quarter holds up without the refund. Earnings per share still rose by double digits, and members shopped more often.

The trouble is what investors are paying for it. Based on Thursday's closing price of $896.48, shares trade at around 43 times earnings, even with the refund taken out. The stock has already dropped 18% off its 52-week high of $1,096.50. But a price-to-earnings ratio in the 40s arguably assumes Costco can grow earnings faster than the 12% or so it just posted, and the fee increase is no longer there to help.

I'd say the beat stands, just by a narrower margin than the headline number suggests. And for a company growing earnings at around this rate, 43 times earnings is still more than I'd like to pay.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.