Shares of Costco Fall After Mixed Earnings and Warnings About Tariffs

Shares of Costco (NASDAQ: COST) traded 6.4% lower, as of 10:14 a.m. ET, after the large membership retailer reported mixed earnings results. Management also made comments about the impact of tariffs on its business and the retail sector as a whole.

The company can be agile to avoid impact of tariffs

Costco reported earnings per share of $4.02 for its second fiscal quarter of 2025, missing Wall Street analyst estimates by $0.09. Revenue came in at $63.7 billion, beating estimates of $63.13 billion.

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 »

On the earnings call, management said that roughly one-third of Costco's sales in the U.S. are imported, and less than half of that number are products from China, Mexico and Canada. Management further said that while the situation continues to evolve rapidly, it will work hard to lessen the impact of higher prices on its customers.

Management also said that tariffs would be felt by the entire sector. "As we say, when it rains, it rains on everyone such as a tariff that we're all equal there, and I feel like our people are very well-equipped to deal with anything coming our way with our reduced SKU (stock keeping units) model, and we have great partnerships with our suppliers and those items are very important to them as well," CFO Gary Millerchip said on the call.

Costco raised annual membership fees last September for the first time since 2017. In the second fiscal quarter, management said the increase contributed about 3% to fee income, but that most of the benefit from higher membership fees will come over the next four quarters.

Is the stock a buy after earnings?

As many know, Costco experienced a significant rerating in 2024. Even after the sell-off in recent weeks, the stock still trades at 53 times forward earnings. The company is well run, but because of the elevated valuation and the ongoing tariff situation, I'm not rushing to buy the stock just yet.

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 Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $677,631!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. 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 March 3, 2025

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.