Costco's Underlying Sales Growth Has Slowed 3 Months in a Row. Its September Report Comes Oct. 7.

Costco Wholesale (NASDAQ:COST) stock has gone nowhere in a year. At around $917 as of this writing, shares stand almost exactly where they were at the start of October 2025. And since peaking at $1,096.50 in May, they've shed around 16%.

The business hasn't been the problem. The membership-based retailer's fiscal fourth quarter of 2026 (the 16 weeks ending Aug. 30, 2026) showed comparable sales growth of 9.4% and a 15% jump in earnings per share, to $6.75.

But Costco also posts sales every month, and these monthly results have been cooling since May.

The next update comes after the market closes on Wednesday, Oct. 7, when Costco posts September sales -- the five weeks through Oct. 4, and the first month of its fiscal 2027. I think one figure in the release matters much more than the others. And it's not the headline comparable sales number.

Image source: Getty Images.

Which number matters most?

Comparable sales track growth at warehouses and websites open for more than 12 months. The headline figure includes gasoline, which has been raising it recently. In the fiscal fourth quarter, higher gas prices added around 3 percentage points to comparable sales growth, Costco said on its earnings call.

The number to watch, then, is comparable sales without gas and currency. Showing how steadily it's eased, Costco's adjusted total company comparable sales climbed 8% year over year in May, 7% in June, 6.6% in July, and 5.4% in August. Some of August's slowdown was the calendar. Labor Day landed a week later this year, and Costco said the change lowered August's comparable sales by a little under 0.75 percentage points. Even adding that back, August was roughly 6%, the lowest of the four months.

Chief financial officer Gary Millerchip described adjusted comparable sales on the fiscal fourth-quarter call as running "in that sort of 6% to 7% range as they've been pretty much consistently for a year now."

He's right about the range. But within it, the trend has been down since spring.

September may get a lift from the same calendar shift in reverse, as the busy week before Labor Day now lands in Costco's fiscal September instead of August. The year-ago comparison isn't all that hard, either. Adjusted comparable sales climbed 6% in September 2025.

With these tailwinds, an adjusted figure around 7% would suggest the slowdown has leveled off. A number closer to 6% would arguably mean it hasn't.

More trips, slower spending

The other figure that matters, traffic (how often members shop), won't be in the monthly release. Costco reports it in quarterly results, and the latest reading was encouraging. Traffic climbed 3.3% worldwide in the fiscal fourth quarter, up from 2.4% in the fiscal third quarter.

What slowed instead was spending per trip. Leaving out gas and currency, Costco's average transaction grew 3.3% in the fiscal fourth quarter, down from 4.2% a quarter earlier.

Put simply, members are showing up more often. But what they spend each visit is growing more slowly than it was.

That's arguably the healthier type of slowdown, because how often members shop says more about their loyalty than the size of any one basket. Yet it leaves the monthly adjusted comparable sales numbers, starting with September's, as the only new look at demand until Costco's fiscal first-quarter report.

Has the pullback made the stock reasonable?

Costco's fiscal 2026 earnings per share grew 14% year over year to $20.76. At around $917, investors are paying about 44 times these earnings.

A year ago, at almost the same share price, Costco traded at about 50 times its fiscal 2025 earnings of $18.21 per share. Put another way, the stock got cheaper because earnings climbed as the price held steady.

Yet 44 times earnings is a lot to pay for this growth rate. Without the one-time benefit from tariff refunds, fourth-quarter earnings per share rose about 12%. And Millerchip said the fourth quarter was the last to see a year-over-year lift from Costco's September 2024 membership fee hike.

Costco is still one of the best-run retailers I follow, and traffic growth picked up in the latest quarter. If September's adjusted comparable sales land back around 7%, the case for the business could get a bit stronger. Still, at about 44 times earnings for growth in the low teens, I think the stock remains too expensive here. The pullback has helped, but I don't think it's gone far enough yet.

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.