Costco Beat. The Stock Still Won’t Go Up.

Analyst Targets

• UBS — Buy, $1,275 price target
• Oppenheimer — Outperform, $1,160 price target
• TD Cowen — Buy, $1,175 price target
• BTIG — Buy, $1,125 price target
• Evercore ISI — Buy, $1,100 price target
• JP Morgan — Overweight, $1,100 price target
• Bank of America — Buy, $1,095 price target (cut from $1,200)

The Quarter in One Sentence

Costco delivered a clean beat on every major line. It still has to earn its multiple back.

What the Numbers Say

Total revenue came in at $95.72 billion against a consensus expectation near $94.86 billion, up 11.1% year over year, while GAAP EPS of $6.75 cleared the roughly $6.54 estimate. Net sales for the quarter rose 11.2% to $93.9 billion.

Key metrics from the 16-week quarter ended August 30, 2026:

• Comparable sales: +9.4% reported, +6.7% adjusted for gas prices and foreign exchange
• Digitally enabled comparable sales: +19.5%
• Shopping frequency: +3.3% worldwide; average transaction up 5.9% worldwide, +3.3% ex-gas and FX
• Net income: $2.998 billion, or $6.75 per diluted share, including a $0.15 non-recurring benefit from IEEPA tariff refunds
• Excluding the tariff benefit, net income and EPS grew 12.3% and 12.4% respectively from the year-ago period
• Gross margin declined 11 basis points year over year to 11.02%; core-on-core margin fell 32 basis points, partly due to a LIFO charge that increased to $152 million from $43 million last year
• FY2027 warehouse openings planned: 33, including five relocations; capital spending guided to approximately $7.5 billion, up from $6.4 billion in fiscal 2026

The Membership File

Paid memberships reached 84.1 million, up 3.8% year over year, while total cardholders grew to 150.4 million. The worldwide renewal rate was 89.8%, with U.S. and Canada holding at 92.3%. Paid executive memberships grew 9.4% to 42.3 million. Executive memberships now account for 75.6% of sales.

Membership fee income grew 7.3% during the quarter, or 7.7% excluding foreign exchange impacts. Total paid member growth has now slowed for eight consecutive quarters, with the 3.8% increase representing a moderation from prior-year rates. The renewal rate held its ground, but the pace of member count expansion is no longer accelerating.

Why the Stock Is Fighting the Beat

Shares fell 3.91% after Q3’s earnings beat and had not recovered, sitting roughly 7% lower over the prior month heading into Thursday’s report. The afterhours reaction was muted: the stock closed the regular session at $896.48, down 0.91%, before edging up about 0.2% to roughly $898 in after-hours trading.

The underlying reason is valuation friction. At roughly 45x trailing earnings with revenue growing 11.6%, the multiple leaves little room for a soft quarter or a one-time boost to carry the story. And the tariff refund is exactly that. Of the $6.75 EPS, $0.15 came from non-recurring IEEPA tariff refunds, net of partial reinvestment into member value. Strip that out and the underlying beat narrows considerably, though the operational picture still holds.

Macro and Industry Context

Costco’s relative position in the consumer landscape remains structurally sound. Comparable sales rose 9.4% and digital comps jumped 19.5%. The full fiscal year delivered 10.1% net sales growth, with digitally enabled sales exceeding $33 billion, up more than 20%. The DoorDash nationwide rollout contributed to digital acceleration and signals Costco is widening its delivery reach without sacrificing the warehouse economics that define its margin structure.

UBS analyst Michael Lasser has flagged that “the market is increasingly focused on a handful of areas where momentum appears to be moderating,” adding that “given Costco’s premium valuation, even small changes in key performance indicators can have an outsized impact on investor sentiment.”

Bull / Base / Bear

Bull: Renewal rates hold at 92.3% in the U.S. and Canada through fiscal 2027. Digital comps sustain above 15%. Warehouse expansion to 33 units drives incremental fee income, and the market re-rates the stock toward the $1,100+ consensus target as LIFO charges normalize.

Base: Core comps settle in the 6–7% adjusted range. Membership count growth stabilizes near 4%. The stock closes the gap toward the all-time high, but does so over 12 months rather than quarters, as the tariff tailwind fades from comparables.

Bear: Tariff refunds and reinvestments are non-recurring items that create uncertainty around earnings sustainability. If margin pressure from LIFO charges persists and member growth decelerates further, the 45x multiple compresses toward 38–40x, implying a stock in the $820–$860 range.

Technical Overlay

In Thursday’s session (September 24, 2026), COST touched a high of $911.40 and a low of $892.26. The 52-week range extends from $844.06 to $1,096.50, putting the current price near the lower third of that band. The $915 level represents the first meaningful resistance from the post-earnings gap fill. A sustained close above that zone would be the earliest signal that institutional buyers are willing to re-engage at scale. Support is clustered near $885, the recent multi-week low.

What to Watch Next

• September comparable sales, reported October 7: the first read on whether Q4 momentum carried
• Membership count growth: any further deceleration below 3.8% changes the fee-income compounding story
• LIFO charges: if memory costs and petroleum-linked inflation persist, gross margin pressure is structural, not seasonal
• Analyst target revisions: with BofA already cutting to $1,095, further reductions would shift the consensus downward and remove a price floor

Bottom Line

Costco closed fiscal 2026 with a genuinely strong quarter. The volume, digital velocity, and renewal rates all confirm the model is working. The real debate is not whether Costco is a good business; it plainly is. The debate is whether a stock sitting 18% below its May high and carrying a 45x multiple deserves a re-rating on the back of a quarter where $0.15 of the beat was a one-time government refund. That answer depends almost entirely on what membership count growth does over the next two quarters. If it holds near 4% and digital comps stay above 15%, the path back to $1,000 is credible. If either decelerates, the multiple does the work in the wrong direction.