NEW YORK, July 6, 2026, 11:06 EDT
- Costco Wholesale Corp NASDAQ:COST was trading at 47.5 times earnings around 10:50 a.m. EDT, almost triple Dollar General Corp NYSE:DG, which was at 16.3 times.
- Bernstein’s Zhihan Ma put Costco and Dollar General on her list of retail picks for the second half of 2026. Dollarama Inc (TSE:DOL) was on Bernstein’s wider list as well, according to Investing.com.
- Dollar General reported a first-quarter gross margin of 31.6%, just 20 basis points under Bernstein’s fiscal 2028 margin estimate, according to Investing.com.
Bernstein’s retail note is getting another look. Costco Wholesale Corp NASDAQ:COST was off 0.8% at $944.04 late Monday morning, while Dollar General Corp NYSE:DG dropped 2.5% to $115.23. When it comes to valuation, Costco traded at 47.5 times earnings. Dollar General’s multiple was 16.3.
Bernstein’s Zhihan Ma bumped her Costco target up to $1,194 from $1,192 and left her outperform rating unchanged, TheStreet said July 4. Ma cited Costco and Dollar General as her top retail calls for the second half of 2026. A July 1 note on the Bernstein outlook from Investing.com also mentioned Dollarama Inc (TSE:DOL) as a third pick.
Investors haven’t lumped both together. Costco’s market cap stands at $419.6 billion, over 16 times the $25.5 billion for Dollar General, using Monday prices. Costco trades at a higher earnings multiple than Walmart Inc NYSE:WMT. Dollar General’s multiple is near Target Corp NYSE:TGT.
| Company | Price at last quoted trade | Intraday move | Market value | P/E |
|---|---|---|---|---|
| Costco Wholesale Corp NASDAQ:COST | $944.04 | down 0.8% | $419.6 bln | 47.5 |
| Dollar General Corp NYSE:DG | $115.23 | off 2.5% | $25.5 bln | 16.3 |
| Walmart Inc NYSE:WMT | $110.07 | fell 1.6% | $880.4 bln | 38.6 |
| Target Corp NYSE:TGT | $125.91 | down 3.3% | $57.4 bln | 16.6 |
Ma’s thesis on Costco banks on core sales momentum even after factoring out gas and FX. Costco’s net sales for May came in at $24.01 billion, up 14.5%. Total comps gained 12.5%. If you back out fuel and currency impact, May comps were up 8.0%.
“Costco has held up relatively well year-to-date,” Ma told TipRanks. Bernstein sees Costco posting “about 6-7% comparable sales growth” if you back out gas and forex, she said. TipRanks
May numbers are running ahead of what Ma pointed to, upping expectations. Costco’s total comp sales for the fiscal third quarter climbed 9.8%. That drops to 6.6% when adjusted. Membership fees hit $1.37 billion, up from $1.24 billion last year. Diluted EPS was $4.93, rising from $4.28.
Dollar General says shoppers are still hunting for lower prices, as the retailer posted first-quarter net sales of $10.8 billion, up 3.4%. Same-store sales climbed 2.0%. Store traffic increased 1.4%, and the average ticket was up 0.5%. Gross margin improved by 65 basis points to 31.6%.
Dollar General CEO Todd Vasos said the quarter saw “positive customer traffic and balanced category growth.” Vasos pointed to “strong operating margin expansion” after EPS topped what the company was looking for. Business Wire
Margin is tight. Bernstein says Dollar General’s gross margin could hit 31.8% by fiscal 2028, according to Investing.com. In Q1, Dollar General posted 31.6%. There’s not much space for the lift from shrink, damage recoveries, or marking up inventory to wear off.
| Bernstein pick | Latest reported sales growth | Comparable-sales signal | Margin / earnings signal | Investor issue |
|---|---|---|---|---|
| Costco Wholesale Corp NASDAQ:COST | May net sales up 14.5% | May comps ex-gas up 8.0% | Q3 earnings at $4.93; membership fees hit $1.37 billion | Core comps need to stick near Bernstein’s 6%-7% estimate after fuel drag fades |
| Dollarama Inc (TSE:DOL) | Q1 sales rose 21.4% to C$1.85 billion | Canadian same-store sales up 5.6% | Operating margin narrowed to 23.4% from 25.6% | Australia, Mexico sales boost numbers but may weigh on margin |
| Dollar General Corp NYSE:DG | Q1 net sales up 3.4% to $10.8 billion | Same-store sales increased 2.0% | Gross margin 31.6%; EPS up 12.4% to $2.00 | Low multiple needs margin recovery to hold |
Dollarama is driving faster sales gains for Bernstein. The retailer posted a 21.4% rise in first-quarter sales to C$1.85 billion, with growth in Canadian stores, 5.6% comp sales in Canada, and C$192.8 million in sales added from Australia.
Dollarama president and CEO Neil Rossy said the retailer’s “strong value proposition” will keep attracting shoppers. Still, the numbers show pressure. Operating margin dropped to 23.4% from 25.6%. The Australian unit reduced diluted EPS by C$0.04, according to the same release. PR Newswire
Bernstein’s basket isn’t just a play on shoppers trading down. For Costco, the membership and fuel business has to deliver or the premium to Walmart doesn’t hold. Dollar General needs to keep that 31.6% gross margin. Dollarama has to get profits, not just revenue, from growth overseas.
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