Costco Wholesale reported its fourth-quarter results, surpassing Wall Street expectations on both revenue and earnings per share (EPS) [1]. Total revenue for the August quarter increased 11.1% year over year to $95.72 billion, exceeding the LSEG consensus estimate of $94.86 billion [1]. Adjusted EPS rose 15% to $6.75, also ahead of expectations, even after excluding a 15-cent benefit from tariff refunds related to a Supreme Court ruling in February [1]. Membership fee income grew 7.3% to $1.85 billion, which was slightly below the FactSet estimate of $1.86 billion [1]. Both worldwide and U.S./Canada membership renewal rates improved compared to the prior quarter, addressing a key concern for investors regarding membership trends [1].
Despite these positive results, the stock showed little reaction in extended trading, rising less than a quarter of a percent. Shares closed Thursday's regular session at $896.48, representing an 18% decline from the May 19 closing high. For comparison, Walmart shares are down almost 20% over the same period [1].
Analysts remain cautious about Costco's growth outlook, particularly in light of recent slowing membership growth rates and inconsistent renewal trends. The article notes that while there was sequential improvement in renewal rates, more consistent results are needed to alleviate Wall Street's concerns, especially given Costco's premium valuation [1]. As a result, the analyst reiterates a hold-equivalent 2 rating and lowers the price target to $1,050 from $1,100, citing compressed valuation multiples and the need for further positive momentum [1].
Notably, the quarter saw growth in the higher-tier executive membership base, which typically renews at higher rates than basic members. Additionally, Costco is attracting younger shoppers, a trend seen as positive for long-term customer loyalty and value [1].
CONCLUSION
Costco delivered a solid quarter with revenue and EPS beats, as well as improvements in membership renewal rates and executive member growth. However, lingering concerns about membership trends and a lowered price target reflect ongoing caution among analysts. The market reaction was muted, indicating investors are waiting for more consistent positive results before turning more bullish on the stock.