<\/p>\n
Costco (COST) just put up one of the cleanest quarters in retail, but the stock fell anyway.<\/p>\n
The retail giant set fresh records at the gas pump, leaned on a fast-growing online business, and kept members renewing at rates most retailers can only envy.<\/p>\n
Yet shares slid in the days after the report, and that gap between the results and the reaction is the real story for anyone holding COST or weighing a buy.<\/p>\n
Costco\u2019s record quarter met a market focused on valuation<\/p>\n
The numbers were strong almost everywhere you looked. <\/p>\n
Net sales rose 11.6% to $69.15 billion, and total revenue of $70.53 billion came in ahead of Wall Street\u2019s estimate, CNBC reports.<\/p>\n
More Retail Stocks:<\/p>\n
Lululemon stock flashes a major signal as the Chip Wilson feud coolsMorgan Stanley sends a stark Walmart stock message on high inflationLowe\u2019s flags consumers spending less on large projects<\/p>\n
So, what went wrong? <\/p>\n
Adjusted earnings of $4.93 a share grew 15% from a year earlier, and while that topped some Wall Street expectations, it trailed others by a penny or two, Yahoo Finance data shows.<\/p>\n
For a stock priced near record highs, the market left no room for error and wouldn\u2019t spare even the slightest miss.<\/p>\n
Investors had already turned cautious in the lead-up to the release of COST’s earnings report, and shares fell close to 5% in the week that followed.<\/p>\n
Costco set records for gasoline volumes in its fiscal third quarter as drivers chased cheaper fuel.<\/p>\n
Marvin Samuel Tolentino Pineda / Getty Images<\/p>\n
What powered Costco\u2019s fiscal third quarter<\/p>\n
Gasoline did much of the heavy lifting. <\/p>\n
Costco said the final five weeks of the quarter produced its best-ever volume weeks as drivers hunted for cheaper fuel, according to Costco\u2019s earnings release.<\/p>\n
The online side is where the growth story gets interesting. <\/p>\n
Digitally enabled sales jumped 21.5%, and app and website traffic climbed 37%, while personalized recommendations added close to $5 billion in e-commerce sales, The Motley Fool reported.<\/p>\n
The membership machine kept humming, with fees up 10.7% to $1.37 billion and renewals above 92% in the U.S. and Canada, TipRanks noted. <\/p>\n
That high-margin fee income is the cash that lets Costco price everything else aggressively, a strength Bank of America has highlighted for months.<\/p>\n
Costco fiscal Q3 2026 scorecardNet sales up 11.6% to $69.15 billion; total revenue $70.53 billionAdjusted earnings per share of $4.93, up 15% year over yearComparable sales up 6.6% excluding gas prices and currency swings148.5 million cardholders and an 89.7% worldwide renewal ratePharmacy was a standout on strong GLP-1 demand
\nSource: Costco (COST) Q3 Earnings Transcript | The Motley Fool
\nHow Costco\u2019s stock price compares with Walmart\u2019s and Amazon\u2019s<\/p>\n
Costco trades around 42 times its expected fiscal 2027 earnings, well above Amazon at under 28 times and Walmart near 35 times. <\/p>\n
This means investors are paying a steep premium for consistency.<\/p>\n
Related: BofA revisits Costco stock price target after= sales surprise<\/p>\n
That premium has mostly worked, as COST is up about 10% in 2026 even after the pullback. <\/p>\n
This is roughly in line with the S&P 500, and analyst targets still sit above current levels, ranging from Truist\u2019s $1,011 to UBS\u2019s $1,275, Benzinga data shows.<\/p>\n
The backdrop matters too. <\/p>\n
With Wall Street lifting its S&P 500 targets on strong earnings, a steady performer like Costco competes for dollars against cheaper, faster-growing stocks.<\/p>\n
What needs to happen for Costco stock to earn its premium<\/p>\n
For the bulls, the path is narrow but clear. <\/p>\n
Costco does not need another blowout to work from here. It needs to keep compounding while the valuation cools into its growth.<\/p>\n
The risks are just as concrete. A rich multiple leaves little cushion if membership growth normalizes, gas prices retreat, or tariffs press on margins.<\/p>\n
What Costco bulls still need to seeSteady high-single-digit comparable sales without a gasoline tailwindRenewal rates holding near record levels as fees riseDigital and pharmacy momentum continuing to scaleAn earnings multiple that drifts lower as profits catch up<\/p>\n
None of that requires accelerating growth, just steady compounding, which is why it’s reasonable for long-term holders to sit tight.<\/p>\n
New buyers may get a better entry by waiting for the next pullback rather than chasing the premium today.<\/p>\n
Related: Costco membership offers key feature many members miss<\/p>\n
#Costco #stock #price #shocks #market #major #blowout #quarter<\/p>\n","protected":false},"excerpt":{"rendered":"
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