Costco Wholesale Has Fallen More Than 10% From Its Peak Before. Here's What History Says Happens Next.

When Costco Wholesale (NASDAQ: COST) stock falls 10% or more from its peak, like right now, history says it usually sets a new high within a year, though there are a couple of important (and recent) counterexamples to be aware of. The stock's most recent record high was in May of this year, and a recovery is already in progress; at the lows, its drawdown was just a hair over 18%.

For shareholders like yours truly, these stretches of bumpiness are annoying, but they're also great opportunities to buy more shares. Let's take a look at how Costco tends to perform in the periods after these declines to see why that's the case.

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This stock doesn't stay down for long

Over the last 10 years, Costco's stock fell 10% or more seven different times before this most recent one drop. In five of those instances, it went on to set a new record within 12 months. And, in all seven cases, it eventually recovered, with the slowest recovery taking around 19 months.

The 2017 slump happened after Amazon agreed to buy the grocer Whole Foods in June, and at least one investment bank downgraded Costco's rating over fears that its members would defect. It went on to hit a fresh record high on Nov. 30, 2017 after its memberships kept growing anyway.

What's more, Costco's earnings per share (EPS) grew consistently throughout 2017 to 2026, showing significant resilience against the impacts of the pandemic and the inflation spike afterwards. Members keep renewing all the while, which is why Costco is at home among stocks with wide moats, with 92.3% of U.S. and Canadian members renewing their memberships in the fiscal fourth quarter of 2026.

The exceptions to the stock's habit of bouncing back are the two most recent data points, which suggest investors shouldn't be quite as gung-ho about its resilience as in the past.

In May 2022, Costco's shares took a hit after two of its competitors, Target and Walmart, both blamed higher-than-normal inflation for their earnings misses. At that time, Costco fell by an unusually brutal 31.5% from its April 2022 high and didn't fully recover to that point until December 2023.

Similarly, a decline that began in February 2025 lasted until May 2026, a rather long stretch, given that the stock market made repeated new all-time highs during the same period.

Both of those cases are also notable because they were initiated from fairly steep valuations. Costco's trailing price-to-earnings (P/E) ratio was at 62.4 in February 2025, a 10-year high. Its EPS still rose during that year, but the valuation multiple shrank faster.

Should you buy Costco on this dip?

If you're wondering whether to buy Costco while it's a bit cheaper than before, there are a few things to consider.

This most recent decline began as the company's growth slowed slightly; sales at warehouses open for one year or more climbed 8.8% in June 2026, down from 12.5% in May. The boost that the company had initially gotten from higher gas prices earlier in the year tapered off a bit.

Another factor is that the stock's valuation hasn't reset much relative to the highs. With a P/E of 47.3 on Oct. 15, Costco's valuation is still well above its 10-year average P/E of 40. While that doesn't put it into the club of most overvalued stocks, that kind of premium valuation multiple tends to not leave much room for bumps in the road without harming the share price.

So, with all of that being said, Costco's stock making a new high within the next 12 months is, unfortunately, somewhat less likely than its record implies. The stock might drift sideways while earnings catch up.

That's no impediment to buying it if you're already set on holding it for the long term, as I am, and so it's probably worth grabbing a few extra shares while they're cheaper than they were in May.

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