"Q2 FY26 (filed March 5, 2026) delivered EPS of $4.58 on revenue of $69.597 billion, both ahead of consensus, with comparable sales up 7.4% and digital comp sales up 22.6%. Membership fee income climbed 13.6% to $1.355 billion on 82.1 million paid memberships and an 89.7% renewal rate."
"Executive memberships now drive 75.8% of sales, and management plans roughly 28 net new warehouses in FY26 to reach 942 locations. Digital momentum looks structural, with app visits up 63% and e-commerce traffic up 32%. Operating leverage is real, gross margin expanded 17 basis points while SG&A improved 13 basis points."
"The bear case starts with valuation. Costco trades at 53x trailing earnings and 46x forward, with a PEG ratio of 5. Tariff uncertainty, FX volatility, and rising employee costs were all flagged in the latest filing."
Costco has recovered from December lows to reclaim the $995 price level, with a proprietary model indicating further upside potential. The company demonstrates strong fundamentals including membership fee income growing double digits, digital comparable sales surging above 20%, and expanding operating margins. Q2 FY26 results exceeded consensus with $4.58 EPS and $69.597 billion revenue, while comparable sales grew 7.4% and membership renewal rates reached 89.7%. Executive memberships now represent 75.8% of sales, and management plans 28 net new warehouses. However, valuation concerns exist with the stock trading at 53x trailing earnings and 46x forward earnings, alongside risks from tariff uncertainty and rising employee costs.
#costco-stock-analysis #retail-valuation #digital-commerce-growth #membership-business-model #investment-risk-assessment
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