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Costco Wholesale Corporation (COST) stock analysis

Costco rebounds toward $1,000 after a weak September, still priced at a steep premium to Consumer Staples peers

Costco closed at 992.13 on Oct 27, 2026, up 7.50% over one month and 9.52% below its 52-week high of 1,096.50. Forward P/E is 43.53 against an industry median of 18.99, while quality metrics such as ROIC of 41.18% are strong. Analysts rate it Buy, with a mean target of 1,104.70 on 10 targets over the last three months.

  • Price: 992.13
  • Market Cap (USD): $440.48B
  • P/E: 46.80×
  • Fwd P/E: 43.53×
  • Div Yield: 0.56%
  • 1Y Return: 6.44%
  • Next Earnings: Dec 10, 2026
  • Mean Target: 1,104.70
  • Rating: Buy

Bull case

  • Returns on capital are high: ROIC is 41.18% (96th percentile of US Consumer Staples) and ROE is 27.73%, with net debt of -12.72B.
  • Fiscal 2026 revenue reached 303.15B against 275.24B in fiscal 2025, and diluted EPS rose to 20.76 from 18.21; next year's consensus EPS growth is 9.86%.
  • Analyst sentiment leans positive: 28 analysts give a Buy rating score of 2.33, the mean target of 1,104.70 is 11.35% above the price, and HSBC upgraded to Buy on Sep 25, 2026.

Bear case

  • Valuation is stretched: forward P/E of 43.53 (on next fiscal year's consensus) is at the 100th percentile versus a sector median of 15.65, and the free cash flow yield is 1.88%.
  • Margins are thin and not expanding much: gross margin is 12.76% (11th percentile) and operating margin 3.93%, with gross margin down 0.17% over one year.
  • Free cash flow fell 9.22% year over year and the stock trails peers on relative strength: the relative strength rating is 65, with 6-month relative strength of -8.37%.

What to watch

  • Ex-dividend date Oct 30, 2026 for the 1.47 quarterly dividend, payable Nov 13, 2026.
  • Next earnings on Dec 10, 2026 (consensus EPS 4.93); the last report on Sep 24, 2026 brought an EPS surprise of 3.21% and a revenue miss of -1.15%.
  • The 200-day average at 970.13 and the 20-day high of 1,021.45 as near-term support and resistance.
  • The 52-week high of 1,096.50, 9.52% above the current price.

General

Costco operates membership warehouses across the US and 14 other countries and markets. The business is growing steadily with strong returns, but the shares carry a large valuation premium. Analysts are broadly positive, and the stock has recovered recently from a soft September.

The business

Costco runs membership warehouses selling food, sundries, fresh food and non-food merchandise. In fiscal 2026 the United States made up 72.51% of revenue, Canada 13.38% and other international operations 14.11%. Food and Sundries was the largest category at 38.52%. The company has 355,000 employees.

Performance and valuation

Trailing revenue is 306.22B, net income 9.41B and EPS 21.18. Price to earnings is 46.80 and forward P/E is 43.53 (next fiscal year basis), against an industry median of 18.99. Price to sales is 1.44, around the sector median of 1.50, because margins are thin.

Market and analyst signals

The stock is up 15.05% year to date and 6.44% over one year, with 3-year annualized return of 22.25%. Analysts hold 39 Buy, 19 Hold and 1 Sell ratings as of Oct 28, 2026. CICC initiated at Outperform on Oct 21, 2026, while Roth Capital reiterated Sell on Sep 25.

Long-term investor

Costco combines durable growth, very high returns on capital and a net cash balance sheet. The debate is price: the shares trade at the top of the sector on forward P/E, while the free cash flow yield sits in the 4th percentile.

Growth durability

Annual revenue rose from 195.93B in fiscal 2021 to 303.15B in fiscal 2026, and diluted EPS from 11.27 to 20.76. The 5-year revenue CAGR is 9.12% and the 3-year EPS CAGR is 13.60%. Consensus EPS is 22.79 for the current year and 25.04 for the next.

Returns and balance sheet

ROIC is 41.18% versus a sector median of 15.32%, and ROE is 27.73%. Cash is 21.30B against total debt of 8.58B, and interest coverage is 84.77. The Piotroski F-score is 8. The current ratio is 1.06, which is modest.

Cash returns, valuation and ownership

Fiscal 2026 dividends paid were 2.46B and buybacks 848.0M, with shares outstanding roughly flat (-0.03% over one year). The dividend yield is 0.56%. Institutional ownership is 73.54%, up 2.32% over three months. Insiders sold three times in the last 90 days (net -3.8M) with no buys.

Swing trader

The stock has bounced sharply from early October lows and sits above its 20-, 50- and 200-day averages, with trend strength high. The latest session was a pullback of 1.30% from near 1,005, so the 1,000 area and 1,021.45 are key levels.

Trend and momentum

Price of 992.13 is 2.74% above the 20-day average (965.63), 5.49% above the 50-day (940.52) and 2.27% above the 200-day (970.13). RSI is 62.18, MACD 21.15 is above its signal line of 18.06, and ADX is 40.5, indicating a strong trend. A death cross on Aug 3, 2026 remains in place, with the 50-day 3.05% below the 200-day.

Recent sessions and levels

The stock rose from 942.25 on Oct 7 to 1,018.21 on Oct 22, then slipped to 1,005.16 and 992.13 on lighter volume (relative volume 0.95). Resistance is the 20-day high of 1,021.45 and then the 52-week high of 1,096.50. Support sits near the 20-day average and the 20-day low of 903.78.

Risk and catalysts

The 14-day ATR is 16.15, or 1.63% of price. Relative strength is mixed: rating 65, with 3-month relative strength of -3.70%. Ex-dividend is Oct 30, 2026 and earnings are Dec 10, 2026. Short interest is 1.71% of float as of Oct 15, 2026, with no analyst upgrades or downgrades in the last 30 days.

Options

Implied volatility is low relative to its own history, at the 15th percentile rank, yet sits above realized volatility. Options are liquid, and the 30-day expiry falls before the next earnings report.

Volatility level and premium

30-day implied volatility is 19.34%, with IV rank 15 and IV percentile 9 against a 52-week range of 17.39% to 30.69%. Realized 30-day volatility is 16.90%, so the implied-to-realized ratio is 1.14 and the volatility risk premium is +1.9 pts. Premium is modestly rich versus realized, but cheap versus its own year.

Term structure and expected moves

The term structure is in contango, with 60-day IV at 22.01% and 90-day at 21.70%. Skew at 25 delta is +1.4 pts. The market-implied 7-day move is 2.68% (26.57) and the 30-day move is 5.54% (55.00).

Earnings and premium yields

The Dec 10 report is not covered by the Nov 27, 2026 expiry. Past earnings moves averaged 2.97% over 8 quarters (median 2.33%, max 7.96%), with an average IV crush of 13.38%. Cash-secured put yield at the 30-delta is 12.14% annualized and covered-call yield is 12.73%; the ex-dividend date falls before expiry.

Analysis written October 28, 2026 from Qanvo data as of October 27, 2026. AI-generated, for information only; not investment advice.