Costco Wholesale has emerged as a standout performer in the stock market this year, significantly outpacing the broader market with a gain of over 13% in 2026, a stark contrast to the S&P 500’s modest 1.5% increase during the same period. This impressive performance raises questions for investors: is now the right time to buy Costco shares, or have those who hesitated during a recent dip already missed their chance?
Recent fiscal results from Costco underscore the strength of its business model. In December, the retailer announced its first-quarter results, revealing a net sales increase of 8.2% year over year, reaching $66 billion. Comparable sales, which reflect sales at stores open for at least one year, rose by 6.4% after adjusting for fluctuations in gasoline prices and foreign exchange. A significant contributing factor was the impressive 14% jump in membership fee income, partially driven by a previous membership fee increase.
Costco’s Chief Financial Officer, Gary Millerchip, noted that, excluding the effects of the fee hike and foreign exchange impacts, membership income would have shown a robust 7.3% growth year over year for the quarter. The company’s ability to attract new members and facilitate upgrades from its standard Gold Star membership to the higher-tier Executive membership played a crucial role in this success.
Additionally, digital sales are thriving, alleviating concerns about Costco’s ability to adapt to the e-commerce landscape. Adjusted digitally enabled comparable sales surged by 20.5% year over year in the first quarter, demonstrating strong momentum. The latest retail sales results for December further reinforced this positive trend, with adjusted comparable sales rising by 6.2% and digitally enabled sales increasing by 18.3%.
Despite these strong fundamentals, Costco’s stock commands a lofty valuation, driven by its consistent growth and resilient business model. Investors are willing to pay a premium due to the reliability of the retailer’s membership-based revenue, which fosters customer loyalty through low-priced essentials. However, the stock’s current price-to-earnings ratio stands around 53, while its forward ratio is approximately 49. Such valuations offer little margin for error; Costco needs to sustain robust growth rates to justify these prices.
Given these factors, some analysts suggest caution. With the current premium on Costco’s stock, waiting for a more attractive entry point, ideally below $800, may be a prudent strategy. Although there’s a risk that the stock may never reach that level, diversified investments in potentially more appealing opportunities could mitigate the chance of missing out altogether.
