Costco shares trade at 47.9 times earnings, well above Amazon's 20.9 and Walmart's 42.8 among six large retailers. Costco's revenue grew 10.1% over the latest four quarters, slower than Amazon's 15.8%, and its 3.9% operating margin trails Amazon's 12.1%. The article suggests the premium may reflect steady membership fee income: $1.849 billion in fiscal Q4, nearly half of the $3.8 billion operating income, with 92.3% of U.S. and Canadian members renewing. Costco plans about $7.5 billion of capital spending in fiscal 2027, mainly for new warehouses, while paid members grew 3.8% year over year.
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- Costco (COST) vs. Walmart (WMT): Which Retailing Giant Has a Wider Moat?
Costco (COST) and Walmart (WMT) have returned -0.71% and -5.38%, respectively, over the six months to October 15. Costco keeps customers returning through its membership model, low prices and the Kirkland Signature brand, while Walmart can grow its e-commerce, advertising and third-party marketplace by leveraging its large customer base and store network. Costco posted fiscal 2026 revenue of $303.2 billion, including $5.9 billion from membership fees, and net income up 14% to $9.2 billion; it ended the year with 84.1 million paid members and a 92.3% renewal rate in the US and Canada. In fiscal Q2 2027, Walmart's global e-commerce sales rose 23% and advertising rose 38%, yet Walmart US comparable sales grew only 2.6%. Costco trades at 40.32x forward earnings versus 38.02x for Walmart.
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Costco's stock, down 10% or more from its peak, has historically set a new high within a year, though two recent cases were exceptions. Over the past 10 years it fell 10% or more seven times before this decline; in five of them it set a new record within 12 months, and all seven recovered, the slowest in about 19 months. The two most recent drops lasted far longer: the 31.5% slide from April 2022's high took until December 2023 to recover, while the decline that began in February 2025 lasted until May 2026. With a P/E of 47.3 versus a 10-year average of 40 and slowing comparable-warehouse sales growth (8.8% in June versus 12.5% in May), the author thinks a new high within 12 months is less likely than the record implies, but still considers the dip a chance for long-term holders to buy more shares.
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Costco (COST) is more than 10% below its peak, but the article notes such declines have historically been followed by a new record high within a year, though two recent exceptions stand out. Over the past 10 years the stock had seven drops of 10% or more before this one, five of which reached a new high within 12 months, and all seven eventually recovered. The two most recent declines took longer: the slide from the April 2022 high did not recover until December 2023, and the decline that began in February 2025 lasted until May 2026. The author points to slowing comparable sales, which rose 8.8% in June 2026 versus 12.5% in May, and a P/E of 47.3, still above its 10-year average of 40, as reasons a new high within 12 months looks less likely.
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Costco's stock has fallen more than 10% from its May record high, with the drawdown at the lows just over 18%, and a recovery is already underway. Over the past 10 years, it had seven drops of 10% or more before this one and recovered from each, setting a new record within 12 months in five cases. The two most recent exceptions were a 31.5% slump from the April 2022 high that took until December 2023 to recover, and a decline from February 2025 that lasted until May 2026. Sales at warehouses open at least a year slowed to 8.8% in June 2026 from 12.5% in May, and the P/E of 47.3 on Oct. 15 remains well above its 10-year average of 40. The author, a long-term holder, says a new high within 12 months is less likely than the stock's record suggests, but sees the dip as a chance to buy more shares.
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