Costco Reports Thursday. Five Things to Check, and Whether a 49× P/E Makes Sense When Treasuries Pay 5%
Costco (COST) reports its fiscal fourth-quarter and full-year results on Thursday, September 24, after the market closes. It is one of the most widely owned retail stocks in the world and one of the most expensive, and the shares have slipped to around $895 — down about 5% over the past year while the market set records. This is a plain-language guide to what the numbers already tell you, what to look for on the night, and how to decide whether the price makes sense when a government bond pays 5%.
What we already know before the report
Costco is unusual: it reports monthly sales, so most of the quarter’s top line is public before earnings day. For the 16-week quarter ended August 30, the company has already said net sales were $93.9 billion, up 11.3% on the same period a year earlier. Sales at stores open more than a year — the figure retailers call comparable sales — rose 9.4%, or 6.7% once you strip out swings in fuel prices and currencies. Online sales grew 19.5%.
Wall Street expects about $94.8 billion of total revenue (sales plus membership fees) and earnings of roughly $6.55 per share, up about 12% from $5.87 a year ago. The revenue is close to known. The profit is the question.
Our own data on the Costco income statement shows how the year has run so far. Through the first three quarters of fiscal 2026 (36 weeks), revenue was $207.4 billion against $189.1 billion a year earlier, up 9.7%, and net income was $6.23 billion against $5.49 billion, up 13.5%. Profit is growing faster than sales, which is the pattern a good retailer wants and the pattern Thursday needs to continue.
How Costco actually makes money
This is the part most people get wrong. Costco is not really in the business of making a profit on the goods it sells. Its gross margin — the share of each sales dollar left after paying for the goods — was 12.8% last fiscal year, one of the lowest of any large retailer, and its operating margin (what is left after running the warehouses) was 3.8%. Walmart’s and Target’s net margins sit in the same 3% range. Costco sells goods at close to cost on purpose.
The profit comes from the membership card. Membership fees were $5.3 billion in fiscal 2025, up 10%, against operating income of $10.4 billion — so roughly half of Costco’s operating profit is the annual fee, which costs almost nothing to collect and renews about 92% of the time in the U.S. and Canada. The company ended fiscal 2025 with 81 million paid members and 914 warehouses. When you buy Costco stock, you are buying a subscription business with a very large grocery store attached.
Five things to check on the night
- Comparable sales excluding fuel and currency. The bar is high: 6.6% last quarter. Anything close to that with a rising dollar and $100 oil is a strong result; the fuel swing can move the headline number either way, which is why the “excluding” figure is the one to read.
- Membership fee income and the renewal rate. Look for fee income growth in the high single digits now that the increase has been fully absorbed, and a U.S. and Canada renewal rate holding near 92%. A dip below 92% would be the first sign that the higher fee is costing members.
- Gross margin. At 12.8% there is no room for error. Tariffs on imported goods raise Costco’s cost of goods; the question is whether it passes the cost on or absorbs it to protect prices, which is its usual instinct. A margin of 12.5% or below on the quarter would say it absorbed.
- The special dividend hint. Costco holds about $8.4 billion more cash than debt and has a habit of paying a large one-off dividend every few years — the last was $15 a share in January 2024. Management rarely pre-announces, but the cash balance and any comment on “returning capital” are what analysts listen for.
- Warehouse openings and international. The growth story is new warehouses at roughly 25 a year (24 net in fiscal 2025, taking the total to 914), increasingly outside the U.S. The count and the plan for fiscal 2027 tell you whether the 10% revenue growth can continue.
The part the report will not tell you: is the price right?
Here is what Investor Sam’s five-pillar verdict says about Costco today, computed from the fiscal 2025 annual report. The overall rating is HOLD with a score of 54, and the pillars explain why:
| Pillar | Score | What it is measuring | What drives it |
|---|---|---|---|
| Quality | 69 | How profitable the business is | Return on equity 27.8% (excellent); net margin 2.9% (thin, by design) |
| Financial health | 54 | Balance-sheet strength | Net cash of $8.4bn; interest covered 67× over; current ratio only 1.03 |
| Growth | 47 | Momentum in the numbers | Revenue +8%, net income +10% in fiscal 2025 — solid, not spectacular |
| Value | 43 | Whether the price is fair | 52× earnings and 14× book value at fiscal year-end — expensive on every measure |
| Momentum | 39 | The share price trend | Down 5.5% over twelve months while the market rose |
Read the value row twice. At the fiscal year-end price of $943, Costco traded at 52 times its earnings. At today’s $895 it is about 49 times last year’s earnings, and somewhere in the mid-40s on this year’s if Thursday lands as expected. Flip that over and you get the earnings yield: the profit the company earns each year for every dollar of share price. At 49× it is about 2%. A 10-year U.S. Treasury bond pays 5% with no risk. So Costco has to grow profits fast enough, for long enough, to turn a 2% yield into something better than 5% — roughly 12% a year for a decade. Its record says it can grow 10–13%. That is the whole debate about the stock in one sentence: it is a superb business priced as if the next ten years will look like the last ten.
For comparison, Walmart (WMT), Target (TGT) and BJ’s Wholesale (BJ) are all rated HOLD too, with similar thin margins and returns on equity in the 22–26% range. Put the four side by side on the compare tool and the difference is not the business quality; it is the multiple the market pays for Costco’s membership model. Our note on what a 5% Treasury does to stock valuations works through the same arithmetic for a dozen other companies.
The bull and bear cases, honestly
The bull case is that the membership business is one of the most reliable profit streams in retail, the renewal rate has survived a fee increase without flinching, Costco is gaining share from every other grocer during a period of high prices, and the balance sheet allows a special dividend whenever management chooses. A 2% earnings yield is a fair price for that certainty.
The bear case is that certainty is exactly what a 5% risk-free rate competes with. Every point of valuation Costco enjoys over Walmart is a bet on growth that must be delivered quarter after quarter, and a stock at 49× earnings can fall 20% on a result that is merely fine. The share price’s drift down this year, while the business did well, is the market beginning to price that.
Neither case is wrong. What Thursday decides is whether the growth is still there. The comps-ex-fuel and membership-fee lines answer that; everything else is noise.
How to follow it on Investor Sam
Add Costco to your watchlist and set an alert, and you will be told when the 10-K is filed and the verdict is recomputed — the annual filing usually arrives in October, and that is when the pillars above update. On the company page, Ask Sam will answer “how much of Costco’s operating income comes from membership fees?” with the figure and the section of the filing it came from. And if you want to see the whole sector, the screener filters retailers by return on equity and P/E, which is the fastest way to see how alone Costco is at the top of the valuation range.
Frequently asked questions
Why does Costco report a 16-week quarter?
Its fiscal year is 52 weeks split into three 12-week quarters and one 16-week fourth quarter ending in late August or early September. Comparisons with the same quarter a year earlier are like-for-like; comparisons with the third quarter are not, which is why growth rates, not dollar totals, are the numbers to use.
Is a P/E of 49 “too high”?
Not automatically. A P/E of 49 is a 2% earnings yield, which is below the Treasury, so the stock is only worth owning if profits grow well above 10% a year for many years. Costco’s record supports that; its size makes it harder each year. The multiple is not a verdict; the multiple plus the growth record is.
Where do the figures come from?
Fiscal 2025 figures and the five-pillar verdict are computed on Investor Sam from Costco’s 10-K filed with the SEC; fiscal 2026 quarterly figures are from its 10-Q filings. Membership counts, renewal rates and warehouse totals are from the fiscal 2025 annual report. Fourth-quarter sales are from Costco’s own September sales release; analyst expectations are from public consensus estimates as of September 23, 2026.
Sources
- Costco Wholesale Corporation — Form 10-K for the fiscal year ended August 31, 2025, and Forms 10-Q for fiscal 2026, via SEC EDGAR; ratios and verdict as computed on Investor Sam.
- Costco Wholesale Corporation — August 2026 sales results release and fourth-quarter earnings announcement date.
- Analyst consensus estimates for fiscal Q4 2026 as reported by Barchart, Seeking Alpha and Yahoo Finance, September 2026.
- U.S. Department of the Treasury — daily yield curve, September 2026.