Costco (COST) Stock Forecast & Price Target

Costco Wholesale is attractive fundamentally because its membership-based model generates recurring, high-quality fee income with exceptional loyalty, as reflected in renewal rates of 92.3% in the U.S. and Canada and 89.8% worldwide, while its scale, low SKU count, and efficient supply chain support durable pricing power and consistently strong traffic. The company also demonstrated operating resilience with EPS of $6.75 versus $6.55 consensus, membership fee income up 7.3%, EBIT of $3,801M, and a 4.0% EBIT margin that was in line and up 10 bps year over year, while gross margin strength ex-gas improved 20 bps and “Core on Core Sales” gross margins rose 18 bps. Its growth outlook remains supported by 33 planned growth clubs next year, capex expected at $7.5B in FY27, expanding e-commerce channels now at about 10% of sales versus 4% in 2019, and strong brand equity reinforced by industry-leading wages, low turnover, and a global membership base of more than 84 million members across approximately 940 warehouses.

Costco Wholesale is facing a negative outlook because its valuation appears stretched relative to fundamentals, with the stock trading around 27x EV/NTM EBITDA and roughly 36.5x FY'28 EPS, while renewal rates, member adds, and traffic are showing signs of deceleration. Although revenue is supported by strong membership economics and a large base of 84.1 million paid members, the business is seeing margin pressure from mix shift toward lower-margin gas, e-commerce, and pharmacy, plus a $152M LIFO charge and ongoing reinvestment of tariff refunds into pricing. The longer-term risk is that Costco’s bulk-value model may face structural headwinds from smaller household sizes, delayed household formation, and GLP-1 adoption, while competitors are improving and investing more aggressively, limiting the path to meaningful multiple expansion.