Costco Wholesale (COST 3.83%) once again delivered outstanding results when it reported its earnings on May 28. Nonetheless, its stock fell on the news. Shares are now up 10% on the year, but down about 5% over the last 12 months.
Let’s take a closer look at the retailer’s results (for its fiscal third quarter, ending May 10, 2026) and prospects, to see if this dip is an opportunity to buy.
Image source: The Motley Fool.
Costco’s same-store sales continue to shine
Costco delivered strong quarterly sales, boosted by robust e-commerce and consumers flocking to its attached gas stations to fill their vehicles’ tanks. Digital revenue climbed 21.5%, with app and website traffic surging 37%. Personalized recommendations helped bolster e-commerce sales by nearly $5 billion. Meanwhile, the company saw record gasoline volumes for a single quarter.
Overall, fiscal Q3 revenue jumped 11.6% year over year to $69.15 billion, and adjusted earnings per share (EPS) increased 15% to $4.93. Same-store sales rose by 6.6% when adjusting for changes in gasoline prices and foreign currency. U.S. same-store sales increased by 6.8% (adjusted), while Canadian comparables climbed by 6.2% (adjusted). Other international same-store sales rose by 5.9% (adjusted).
Excluding gasoline and currency impacts, Costco’s average transaction climbed 4.2% worldwide and 5% in the U.S., while traffic grew by 2.4% worldwide and 1.8% in the U.S. It saw high-single-digit same-store growth both in both fresh food and nonfood items.
Membership-fee revenue jumped 10.7% year over year in the quarter to $1.37 billion. Paid memberships rose by 4.1% to 82.9 million households, while higher-cost executive memberships jumped by 9.6% to 41.2 million. Costco’s membership renewal rate was 92.2% in North America and 89.7% worldwide.
The warehouse club opened four new locations in the quarter, and expects to open 12 more this fiscal year for a total of 26 net new openings. It now has 928 warehouses around the globe.
Today’s Change
(-3.83%) $-38.12
Current Price
$957.08
Key Data Points
Market Cap
$424B
Day’s Range
$945.45 – $998.08
52wk Range
$844.06 – $1096.50
Volume
223.4K
Avg Vol
2M
Gross Margin
13.55%
Dividend Yield
0.56%
Is it time to buy this stock on the dip?
Costco continues to demonstrate why it’s one of the best retailers in the world, as it keeps delivering solid results quarter after quarter. That type of consistency, and the company’s recession-resistant nature, deserve a premium.
However, how much of a premium it should command is the tricky part. The stock currently trades at a forward price-to-earnings (P/E) ratio of nearly 42 times its expected earnings for fiscal 2027 (which ends in August 2027). That’s considerably more than Amazon, which trades at less than 28 times forward estimates, and has been growing its retail revenue just as quickly while showing much stronger operating leverage. It’s also a premium to Walmart, which trades at 35 times forward earnings estimates.
While a solid long-term holding, Costco is not a stock I’d be picking up on the dip at this time, as its upside looks a bit capped by its high valuation.
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