NEW YORK, July 28, 2026, 11:01 EDT (U.S. markets open)
- Costco shares were up 3.6% at $986.08 shortly after 10:46 a.m. EDT.
- The Consumer Staples Select Sector SPDR Fund (NYSEARCA:XLP) climbed 3.9%. Three major retail rivals saw an average increase of 3.8%.
- Costco reported a 7.0% increase in adjusted comparable sales for June, with digitally enabled sales up 21.5%.
Costco shares rose 3.6% to $986.08 early Tuesday. The gain appeared driven by sector rotation rather than a new re-rating.
The consumer-staples fund gained 3.9%. As of 9:49 a.m. EDT, the sector index advanced 3.1%, while technology slipped 1.9%. Semiconductor stocks declined due to worries over AI investment and rivalry from China.
Costco did not take the leading position.
| Company | Intraday move | Trailing P/E | Costco P/E premium |
|---|---|---|---|
| Costco Wholesale NASDAQ:COST | up 3.6% | 49.6x | — |
| Walmart NASDAQ:WMT | up 3.6% | 40.6x | 22% |
| BJ’s Wholesale Club NYSE:BJ | up 4.0% | 22.6x | 119% |
| Target NYSE:TGT | up 3.7% | 19.2x | 158% |
Market update as of around 10:46 a.m. EDT. Premiums reflect how Costco’s trailing multiple stacks up against each peer.
The trio of peers posted an average rise of 3.8%, roughly 0.2 percentage point higher than Costco. This trend undercuts the idea that Tuesday’s climb was driven by company-specific factors.
Costco shares trade at $986.08, giving the stock a trailing earnings multiple of 49.6. If the share price remains the same, earnings per share would need to climb to $24.27 for Costco to trade at Walmart’s price-to-earnings ratio of 40.6. That represents a 22% increase over Costco’s trailing EPS of $19.88. This calculation serves as an illustration and is not a projection.
The threshold is also 7% above the consensus for fiscal 2027, and is close to the fiscal 2028 projection of $24.97. According to the peer-multiple comparison, the share price already reflects a substantial portion of anticipated earnings growth over the next two years.
Recent earnings point to ongoing expansion, though not as quickly. Net income for the third quarter increased 15% to $2.19 billion. Net sales were up 11.6% at $69.15 billion.
Operational momentum continues to be strong. Net sales for June increased by 10.6% to reach $29.24 billion. Adjusted comparable sales climbed 7.0%, and digital sales rose by 21.5%.
Membership continues to provide the strongest valuation backing. The number of paid members increased by 4.1% to 82.9 million, with executive memberships up by 9.6%. Renewal rates in the U.S. and Canada hit 92.2%. Revenue from membership fees climbed 10.7%.
Costco has relied on pricing as a tool to maintain strong customer loyalty. “We’ve widened our gaps in terms of price,” said CFO Gary Millerchip in May. Zacks strategist Bryan Hayes described this move as “classic Costco,” but also noted the potential for short-term margin challenges. Reuters
The company’s lengthy track record helps justify investor patience. Costco shares climbed 459.6% over the past decade through July 17, compared with a 244.7% gain for the S&P 500 in the same timeframe. However, the stock’s current price-to-earnings ratio is 34% higher than Costco’s 10-year median of 37.
Valuation models show a wide divergence. GuruFocus calculates $421.23 based on earnings and $559.77 based on free cash flow. Tuesday’s price stands 76% to 134% higher than these model values. These figures are model projections, not consensus forecasts. The publisher also highlights low predictability and the impact of changes to discount rates.
The most recent analyst poll showed a less negative outlook, recording 24 Buy or Overweight recommendations and 17 lower ratings. The consensus stayed at Overweight, and the median price target was $1,100. This suggests an approximate 12% potential gain from Tuesday’s closing price.
Costco operated 933 warehouses as of early July. The company aims to open over 30 net new locations each year in the years ahead. For fiscal 2026, guidance was trimmed to 26 due to delays affecting some projects. Fourth-quarter earnings are set to be released on September 24.
Risks: A slowdown in traffic, pressure on food margins, fluctuations in fuel prices and currency shifts may limit earnings. Rising interest rates may further squeeze Costco’s premium valuation multiple.
Tuesday’s rally is primarily driven by shifts in portfolio allocation rather than fresh data on Costco. The September report will be key to demonstrate if earnings are catching up to the current valuation.
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