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Costco Wholesale Corporation (COST) Stock

Costco Wholesale Corporation Stock Details, Movements and Public Alerts

Costco (COST): Ron Vachris's Membership Fee Increase Powers $290 Million Revenue Boost While E-commerce Soars 34%

Costco stands at a fascinating inflection point as Ron Vachris, who rose from forklift driver to CEO over four decades, takes the helm from Craig Jelinek in January 2024. His first major decision-raising membership fees from $60 to $65-signals confidence in Costco's value proposition even as consumers face inflation fatigue. With Kirkland Signature products generating $58 billion annually, e-commerce growing 34%, and international expansion accelerating in China and Japan, Costco proves that old-school retail executed perfectly can still command a $434 billion market valuation. The company's unique ability to generate profits primarily from membership fees while selling products at razor-thin margins creates a moat that even Amazon struggles to breach.

  • Membership Economics:137M members paying $65-130 annually, 93% renewal rate
  • E-commerce Surge:34.4% growth in December 2024, approaching $20B annual run rate
  • Kirkland Dominance:$58B private label revenue, 28% of total sales
  • Global Footprint:897 warehouses across 14 countries, 25 openings planned 2025
  • Financial Strength:$9.5B free cash flow, negative working capital model

52-Week High

$1,076.83

-9.91% from high

52-Week Low

$790.04

+22.79% from low

Avg Daily Volume

151

Fundamentals

Valuation Metrics

P/E Ratio (TTM)

55.88

Above market average

Forward P/E

48.54

Earnings expected to grow

PEG Ratio

5.23

Potentially overvalued

Price to Book

16.11

EV/EBITDA

33.26

EPS (TTM)

$17.63

Price to Sales

1.63

Beta

0.99

Less volatile than market

How is COST valued relative to its earnings and growth?
Costco Wholesale Corporation trades at a P/E ratio of 55.88, which is above the market average of approximately 20. This premium valuation suggests investors expect above-average growth or the company has competitive advantages justifying the higher multiple. Looking ahead, the forward P/E of 48.54 is lower than the current P/E, indicating analysts expect earnings to grow over the next year. The PEG ratio of 5.23 indicates a premium valuation even accounting for growth.
What is COST's risk profile compared to the market?
With a beta of 0.99, Costco Wholesale Corporation is less volatile than the overall market. This means when the market moves up or down by 10%, this stock typically moves less than 10% in the same direction. Lower beta stocks are often preferred by conservative investors seeking stability. The price-to-book ratio of 16.11 shows investors value the company above its book value, which often reflects intangible assets or growth prospects.

Performance & Growth

Profit Margin

2.92%

Operating Margin

4.00%

Return on Equity

32.10%

Return on Assets

8.79%

Revenue Growth (YoY)

8.00%

Earnings Growth (YoY)

13.20%

How profitable and efficient is COST's business model?
Costco Wholesale Corporation achieves a profit margin of 2.92%, meaning it retains $2.92 from every $100 in revenue after all expenses. This relatively low margin suggests the company operates in a competitive environment or high-cost industry where profitability is challenging. The operating margin of 4.00% reveals how efficiently the company runs its core business operations before interest and taxes. With ROE at 32.10% and ROA at 8.79%, the company generates strong returns on invested capital.
What are COST's recent growth trends?
Costco Wholesale Corporation's revenue grew by 8.00% year-over-year, showing steady progress in growing the business. This positive trajectory indicates the company maintains competitive positioning in its markets. Earnings increased by 13.20% year-over-year, outpacing revenue growth through improved margins. These growth metrics should be evaluated against RETAIL-VARIETY STORES industry averages for proper context.

Dividend Information

Dividend Per Share

$4.78

Dividend Yield

0.53%

Ex-Dividend Date

5/2/2025

Dividend Date

5/16/2025

What dividend income can investors expect from COST?
Costco Wholesale Corporation offers a dividend yield of 0.53%, paying $4.78 per share annually. This modest yield below 2% suggests the company prioritizes growth investments over current income. While the dividend provides some return, investors are likely attracted more by capital appreciation potential than income generation. To receive the next dividend, shares must be purchased before the ex-dividend date of 5/2/2025.
How reliable is COST's dividend for long-term investors?
The dividend sustainability can be assessed through the payout ratio - Costco Wholesale Corporation pays $4.78 per share in dividends against earnings of $17.63 per share, resulting in a payout ratio of 27.11%. This conservative payout below 30% indicates excellent dividend safety with substantial room for future increases. The company retains most earnings for growth while still rewarding shareholders. The next dividend payment is scheduled for 5/16/2025.

Company Size & Market

Market Cap

$436.89B

Shares Outstanding

443.48M

Book Value/Share

$61.16

Asset Type

Common Stock

What is COST's market capitalization and position?
Costco Wholesale Corporation has a market capitalization of $436.89B, classifying it as a mega-cap stock (over $200B). These are the largest, most established companies globally, typically offering stability and liquidity but with more modest growth potential. Mega-caps often pay dividends and weather economic downturns better than smaller companies. With 443.48M shares outstanding, the company's ownership is relatively concentrated. As a major player in the RETAIL-VARIETY STORES industry, it competes with other firms in this sector.
How does COST's price compare to its book value?
Costco Wholesale Corporation's book value per share is $61.16, while the current stock price is $970.08, resulting in a price-to-book (P/B) ratio of 15.86. This high P/B ratio indicates significant intangible assets, strong brand value, or high growth expectations. Technology and consumer brand companies often trade at elevated P/B ratios due to intellectual property and competitive advantages not reflected on the balance sheet. As a common stock, this represents equity ownership with voting rights.

Analyst Ratings

Analyst Target Price

$1,056.36

8.89% upside potential

Analyst Recommendations

Strong Buy

5

Buy

17

Hold

15

Sell

1

Strong Sell

0

How reliable are analyst predictions for COST?
38 analysts cover COST with 58% recommending buy/strong buy ratings. Analyst predictions have mixed reliability - studies show consensus rarely beats market returns consistently. The mixed views reflect uncertainty about the outlook. The consensus target of $1,056.36 implies 8.9% upside, but targets are often adjusted to follow price moves rather than predict them.
What is the Wall Street consensus on COST?
Current analyst recommendations:5 Strong Buy, 17 Buy, 15 Hold, 1 Sell, 0The bullish tilt suggests optimism about future prospects, though investors should conduct independent research.Remember that analyst opinions often lag price movements and can be influenced by investment banking relationships.

Fundamentals last updated: Jul 1, 2025, 02:33 AM

Technical Indicators

What does COST's RSI value tell investors?
RSI data is not available for this stock.
How should traders interpret COST's MACD and moving average crossovers?
MACD and moving average data are not available for this stock.

No technical indicators available yet.

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Costco (COST) Stock Analysis 2025: Complete Investment Guide

Costco stands at a fascinating inflection point as Ron Vachris, who rose from forklift driver to CEO over four decades, takes the helm from Craig Jelinek in January 2024. His first major decision-raising membership fees from $60 to $65-signals confidence in Costco's value proposition even as consumers face inflation fatigue. With Kirkland Signature products generating $58 billion annually, e-commerce growing 34%, and international expansion accelerating in China and Japan, Costco proves that old-school retail executed perfectly can still command a $434 billion market valuation. The company's unique ability to generate profits primarily from membership fees while selling products at razor-thin margins creates a moat that even Amazon struggles to breach.

Ron Vachris faced an enviable yet daunting challenge when he became Costco's CEO in January 2024: following Craig Jelinek, who had masterfully navigated the company through pandemic chaos while maintaining its famous hot dog combo at $1.50. A 40-year Costco veteran who literally started as a forklift driver, Vachris chose to make his mark early with the first membership fee increase since 2017. 'We're not just raising prices,' Vachris explained at the September analyst meeting, 'we're investing in the member experience that drives our 93% renewal rates.' The $5 increase to basic membership and $10 bump for Executive members will generate approximately $290 million in additional annual revenue-pure profit that drops directly to the bottom line. For investors analyzing Costco at $984 per share and a $434 billion market cap, understanding Vachris's vision for balancing member value with shareholder returns becomes crucial.

The December 2024 earnings report validated Vachris's confidence. Comparable sales grew 7.5% globally, with e-commerce exploding 34.4% year-over-year. More impressively, membership renewal rates in the U.S. and Canada hit 93%, actually increasing despite the fee hike. Earnings per share of $4.04 beat analyst estimates by 6%, while the company generated $3.2 billion in quarterly cash flow. These aren't just numbers-they represent Costco's unique ability to thrive in an Amazon-dominated world by offering an experience that can't be replicated online. The company's $20 billion e-commerce operation, anchored by same-day grocery delivery and big-ticket items like appliances, proves that traditional retailers can successfully blend physical and digital channels when executed properly.

The Membership Model: Retail's Most Elegant Business

Costco's business model represents perhaps the purest expression of aligned incentives in retail. The company essentially breaks even on product sales, operating merchandise at a 10-11% gross margin compared to traditional retailers' 25-35%. Instead, virtually all profits derive from membership fees-$4.8 billion annually from 137 million members worldwide. This creates a virtuous cycle: lower prices attract more members, more members enable better purchasing power, better purchasing drives even lower prices. The psychology is brilliant-members feel compelled to shop frequently to 'justify' their membership, creating predictable traffic patterns that suppliers covet.

The Executive Membership tier, now priced at $130 annually, demonstrates the model's sophistication. These members receive 2% cash back on purchases, creating an incentive to consolidate spending at Costco. Executive members now represent over 50% of the member base but drive 73% of sales, spending an average of $4,400 annually versus $2,200 for basic members. The recent fee increase barely dented sign-ups, with Executive upgrades actually accelerating as members calculate that increased spending makes the premium tier worthwhile. This self-selecting segmentation allows Costco to extract more value from high-volume shoppers while maintaining accessibility for price-conscious members.

Kirkland Signature: The $58 Billion Secret Weapon

While membership fees grab headlines, Kirkland Signature products represent Costco's most underappreciated competitive advantage. The private label generated $58 billion in 2024 revenue-larger than Nike's global sales-while maintaining quality standards that often exceed national brands. Vachris, who spent years overseeing merchandising, understands that Kirkland's success stems from partnering with premium manufacturers: Starbucks roasts Kirkland coffee, Duracell makes the batteries, and premium spirits come from established distilleries. This approach allows Costco to offer 20-30% savings while maintaining margins slightly higher than branded equivalents.

The Kirkland strategy extends beyond simple private labeling to category disruption. When Costco introduced Kirkland Signature golf balls manufactured to compete with Titleist Pro V1s at half the price, it captured significant market share within two years. The recent launch of Kirkland Signature weight-loss medication (a generic version of Ozempic) at 90% below branded prices demonstrates how the brand can disrupt even pharmaceutical categories. With Kirkland representing 28% of total sales and growing faster than overall revenue, the brand's expansion into new categories like electric vehicles accessories and sustainable products positions it as a growth driver rather than merely a margin enhancer.

E-commerce Evolution: Beyond the Warehouse

Costco's digital transformation, long dismissed by analysts as an afterthought, has quietly become a $20 billion business growing 30%+ annually. The December 34.4% growth rate reflects more than pandemic pull-forward-it represents fundamental changes in how members shop. Same-day grocery delivery through Instacart reaches 95% of U.S. members, while Costco.com expands selection beyond warehouse constraints. Big-ticket categories like appliances, furniture, and electronics drive average online orders above $300, multiples higher than Amazon's typical basket.

Vachris's technology investments focus on member experience rather than Silicon Valley flash. The new mobile app, downloaded by 40 million members, enables digital membership cards, personalized offers, and warehouse inventory checking. Buy online, pick up in warehouse (BOPIS) launches in 2025, addressing the final friction point for time-pressed members. The $1.2 billion annual technology budget may seem modest versus Amazon's tens of billions, but Costco's focused approach on member utility rather than innovation for its own sake reflects the company's disciplined culture. As e-commerce approaches 10% of total sales, the channel's higher margins (due to no real estate costs) increasingly boost overall profitability.

International Expansion: The Next Growth Frontier

While U.S. operations generate 70% of revenue, international markets represent Costco's most significant growth opportunity. The company operates 276 warehouses internationally, with particular momentum in Asia. China, despite having only 5 warehouses, generates sales per location 50% higher than U.S. averages as middle-class consumers embrace the membership model. The recent announcement of 10 new China locations over three years signals Vachris's confidence in navigating geopolitical complexities for long-term gains.

Japan, Costco's largest international market with 33 warehouses, demonstrates the model's cross-cultural appeal. Japanese members renew at 95% rates, appreciating both bulk savings and imported American products unavailable elsewhere. South Korea's 18 locations generate the highest sales per square foot globally, validating dense urban formats. The international playbook-start slowly, adapt merchandise to local preferences, build word-of-mouth-requires patience but creates dominant positions. With international comparable sales growing 9.2% in constant currency versus 7.1% domestically, overseas expansion could drive acceleration as saturation concerns mount in North America.

Financial Fortress: The Power of Negative Working Capital

Costco's financial model showcases operational excellence translated into superior economics. The company operates with negative working capital-inventory turns so quickly (12.4 times annually) that suppliers finance Costco's operations. This allows the company to generate $9.5 billion in free cash flow on $254 billion in revenue, a 3.7% margin that beats most retailers despite ultra-low product markups. Return on invested capital consistently exceeds 20%, placing Costco among the most efficient capital deployers in retail.

Capital allocation under Vachris maintains Jelinek's shareholder-friendly approach. The company invests approximately $4 billion annually in new warehouses and technology, generating predictable 15%+ returns. The dividend, currently $4.40 per share, consumes just $2 billion of cash flow, leaving room for special dividends that have totaled $15.50 per share over the past decade. Share buybacks remain modest, reflecting management's view that reinvestment in growth generates superior returns. With just $7 billion in debt against $17 billion in cash and investments, Costco maintains financial flexibility for opportunistic moves while running the business conservatively.

Key Investment Risks

  • Amazon Prime competition intensifying with 200M+ members and expanding grocery presence
  • U.S. market saturation with 609 warehouses potentially limiting domestic growth
  • Wage pressure as labor costs rise faster than membership fees can offset
  • Consumer spending slowdown impacting high-ticket discretionary purchases
  • Supply chain disruptions affecting inventory availability and costs
  • Technology investment requirements accelerating to match digital competitors
  • Membership model vulnerability if value perception diminishes

Growth Catalysts

  • China expansion with 10 new warehouses creating multi-billion revenue opportunity
  • E-commerce acceleration toward $30B+ as digital capabilities improve
  • Kirkland expansion into healthcare and services driving margin improvement
  • Membership fee pricing power with potential $75 basic tier by 2027
  • Real estate value realization with $35B+ property portfolio
  • Business member growth as B2B platform expands capabilities
  • Healthcare services rollout including pharmacy, optical, and clinics

Leadership Transition: From Forklift to Fortune 500

Ron Vachris's journey from forklift driver to CEO embodies Costco's promote-from-within culture that ensures strategic continuity. Starting in 1982 at age 19, Vachris worked in warehouses for two decades before moving to corporate, gaining intimate knowledge of operations, merchandising, and member service. His appointment as President in 2022 signaled the succession plan, allowing two years of preparation alongside Jelinek. This methodical approach contrasts with retail's typical outside hires and explains Costco's consistent execution across leadership changes.

Vachris's early moves suggest evolution rather than revolution. The membership fee increase, while grabbing headlines, simply maintains historical patterns of 5-7 year cycles. More telling are subtle shifts: accelerated technology investments, expanded Kirkland development, and increased international focus. His operations background shows in attention to warehouse efficiency, with new layouts improving shopping flow and checkout speeds. At 61, Vachris likely has a decade-long runway, providing stability as Costco navigates retail transformation. The deep bench of long-tenured executives ensures succession depth, a critical intangible for long-term investors.

Valuation Analysis: Premium Quality at Premium Prices

At $984 per share, Costco trades at 54x trailing earnings and 47x forward estimates-seemingly expensive for a retailer growing revenue at 7-8%. However, traditional retail metrics undervalue Costco's unique characteristics. The membership model creates predictable, high-margin revenue streams more akin to software subscriptions than traditional retail. Adjusting for the company's minimal capital requirements and consistent cash generation, the EV/FCF multiple of 42x aligns more closely with high-quality consumer staples.

Discounted cash flow analysis reveals the market's embedded assumptions. Using 7% revenue growth, gradual margin expansion from operational leverage, and a 9% WACC yields intrinsic value around $850-900 per share. Reaching current prices requires either sustained 9%+ revenue growth or meaningful margin expansion-both possible but not guaranteed. The bull case envisions e-commerce driving mix shift benefits, international acceleration, and membership fee increases every 5 years, pushing fair value above $1,100. The bear case models U.S. saturation, increased competition, and consumer pressure, suggesting downside to $800. Risk-reward appears balanced, making Costco more suitable for quality-focused investors than value seekers.

Hidden Value: The Real Estate Portfolio

One underappreciated aspect of Costco's value lies in its real estate holdings. The company owns approximately 85% of its warehouses and land, carried on the books at historical cost but worth conservatively $35-40 billion at market values. This hidden asset provides downside protection and strategic flexibility-in a severe recession, Costco could monetize properties through sale-leasebacks while maintaining operations. The owned real estate also enables Costco to control its destiny, avoiding rent escalations that pressure other retailers' margins.

The real estate strategy extends beyond financial engineering to competitive advantage. Costco's site selection process, refined over 40 years, identifies locations with specific demographic and traffic patterns that virtually guarantee success. The company's willingness to wait years for perfect sites explains why new warehouses generate positive comparable sales immediately. In expensive coastal markets, owned land appreciates faster than the business grows, creating NAV expansion independent of operations. While management shows no interest in REIT conversions or financial engineering, the property portfolio provides patient investors with additional margin of safety.

Investment Recommendation by Investor Type

Conclusion

HOLD at current levels for value-conscious investors; BUY on any weakness below $950 for quality-focused portfolios. Costco's combination of predictable growth, international expansion, and e-commerce acceleration supports long-term compounding, but the 47x forward P/E leaves little room for error. The recent membership fee increase and 34% e-commerce growth validate the business model's durability, while Ron Vachris's operational focus ensures execution continuity. Ideal for investors seeking sleep-well-at-night quality willing to pay premium valuations. Consider accumulating positions during market volatility when high-multiple stocks face pressure. Monitor monthly comparable sales, membership trends, and international expansion pace as key performance indicators.

Bull Case
$1,150 (17% upside)
Base Case
$1,025 (4% upside)
Bear Case
$850 (14% downside)

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