CostcoCostco Wholesale Corporation · COST
The $1,066.14 close is 2.8% below the 52-week high of $1,096.50, and the debate ended 3–3 for a HOLD
A $30 special dividend and four price target raises lifted shareholder-return hopes, but a 45.8x forward P/E leaves little room if growth slows. Costco announced a $13.30B special dividend after the Nov 10 close; the Dec 10 fiscal Q1 report will show whether revenue of $74.38B and EPS of $4.92 are met
Research team debate
Of six issues, the special dividend and target raises went to Bull, valuation, rates and price action to Bear, and the Dec 10 earnings are on hold, so the 3–3 tie gives HOLD
The overall verdict is HOLD. The special dividend and target raises lifted shareholder returns and expectations, but a 45.8x forward P/E, a 2.2% earnings yield and short-term strain weigh equally against them. The verdict reopens if Dec 10 fiscal Q1 results confirm revenue of $74.38B and EPS of $4.92 or better.
- Bull case — the $13.30B special dividend is 0.8 times operating cash flow of $15.82B, so the damage to finances is limited, and four target raises against one cut show rising expectations.
- Bear case — the 45.8x forward P/E and 3.8 PEG are higher than Walmart's and BJ's, the 2.2% earnings yield is less than half the 4.98% 10-year yield, and upside to the average target is +0.7%.
- On hold — the verdict reopens once the Dec 10 fiscal Q1 report shows whether revenue of $74.38B and EPS of $4.92 are met.
1aDebate by Issue · 6
Shareholder returns just jumped. On Nov 10 the board declared a $30 per-share special dividend ($13.30B in total, 2.8% of the close) and reauthorized a $4B buyback (8-K and release headline). Cash and short-term investments were $21.30B at 8/31, up 39.4% in a year, against total debt of $8.58B.
The dividend is one-off and it drains cash. The $13.30B is 1.4 times fiscal 2026 free cash flow of $9.38B, cutting cash and short-term investments from $21.30B to about $8B, close to total debt of $8.58B. The $30 simply comes off the price after the Nov 24 record date; it does not create value.
Even after the cut, fiscal 2026 operating cash flow of $15.82B is 1.2 times the payout, and total debt rose only 4.0% in a year. Cash that builds before the Dec 4 payment is not in that calculation.
With operating cash flow at 1.2 times the payout, the damage to finances is limited and the return really did get bigger, so the verdict goes to Bull. Bear is right, though, that the ex-dividend adjustment creates no value.[S2·S3·S8]
The premium has support. Fiscal 2026 revenue rose 10.1%, net income 13.9% and diluted EPS 14.0%, from $18.21 to $20.76. Year-end P/E was 38.8x in 2023, 53.9x in 2024 and 51.8x in 2025, so today's 51.4x TTM sits in the two-year range. Walmart also trades at 45.3x TTM.
Growth is slowing while the multiple stays. FY27 EPS is expected at $22.81, up 9.9%, and FY28 up 10.0%, On the same basis for all three (next-12-month expected EPS ÷ TTM EPS), PEG is 3.8 for Costco (45.8 ÷ 12.0), 2.9 for Walmart and 2.6 for BJ's, and the peer forward P/E median is 16.6x.
A high multiple is fine when growth backs it up, but EPS growth is slowing to about 10% and a PEG of 3.8 is above Walmart's 2.9 and BJ's 2.6, so the verdict goes to Bear.[S1·S2·S7]
Growth has held up. Q3 2026 (fiscal Q4, 16 weeks) revenue was $95.72B, up 11.1%, operating income $3.80B, up 13.8%, and EPS $6.75, up 15.0%, with the operating margin at 4.0% versus 3.9% a year earlier. The stock rose 2.9% on Sep 25, the day after the earnings 8-K.
Consensus assumes high-single-digit growth. Dec 10 consensus is revenue of $74.38B (+10.5% from $67.31B in the year-earlier quarter) and EPS of $4.92 (+9.3%). That is below last quarter's 15.0% EPS growth, so slowing is already assumed, and this pace does not justify a higher 45.8x forward P/E.
This event has not happened yet, so the verdict is on hold. The Dec 10 report will show whether revenue of $74.38B and EPS of $4.92 are met, and the verdict on this issue reopens with that result.[S2·S3]
Expectations are rising. Recent changes are four raises: JPMorgan $1,015→$1,150 (Nov 5), Tigress $1,065→$1,250 (Oct 15), and Bernstein $1,143→$1,155 and Mizuho $1,065→$1,100 (Nov 11 headlines, after the close). The only cut is Deutsche Bank, $1,091→$1,079 (Sep 28).
Even after the raises the average sits at the current price. The 37-analyst average of $1,073.35 is 0.7% above the close and the median of $1,095 is 2.7% above; ratings are 25 Buy, 14 Hold and 2 Sell. RBC kept Sector Perform with $1,000 (−6.2%) and the lowest target is $770.
Target issues are judged by the direction of recent changes, and four raises to one cut favors Bull. The average sitting near the close does limit further upside.[S4·S8]
Costco is less sensitive to rates. At 8/31 cash exceeded total debt by $12.73B, so interest cost is modest, and equity is $35.80B, up 22.8%. In a week the 10-year yield rose only 0.03pp, while WTI fell 10.5% and the VIX 6.6%, easing market tension.
The issue is the price, not the interest bill. The forward earnings yield at 45.8x is 2.2% (1.9% at the 51.4x TTM multiple), less than half the 4.98% 10-year yield. If rates rise further, the high multiple gets harder to justify.
Financial risk is small, but an earnings yield under half the Treasury yield leaves the multiple poorly defended, so the verdict goes to Bear.[S1·S2·S7]
The trend is up. The $1,066.14 close is above the 5-, 20-, 60-, 120- and 200-day averages and 12.9% above $944.32 on Aug 11. The 52-week high of $1,096.50 (May 19) is only 2.8% away.
The stock rose quickly. It is 5.0% above the 20-day average of $1,015.26 and 11.5% above the 60-day average of $956.25, and Nov 10 volume fell to 0.63 times the 20-day average. Max pain for the Nov 13 expiry is $1,042.50, 2.2% below the close.
The trend is up, but the widening gap to the 20- and 60-day averages and lower volume make the short-term strain heavier, so the verdict goes to Bear.[S1·S5]
1bScenarios
LightView does not issue its own target price. The high, average and low of external target prices are used as price references for scenarios[S4]
High target $1,315 · assumes faster growth and continued shareholder returns such as the special dividend
Average target $1,073.35 · assumes revenue and EPS keep growing about 10%
Low target $770 · assumes slower growth and a lower multiple
1cConditions That Change the Verdict
The verdict is based only on the data in this report and is not a recommendation to buy or sell.
Investment Summary
Q3 2026 (fiscal Q4, 16 weeks) revenue of $95.72B grew 11.1% from a year earlier, and a $30 special dividend ($13.30B in total) was announced after the Nov 10 close
High$1096.50
2aKey Data
The special dividend, target raises and 10.1% annual revenue growth support the stock, but a 45.8x forward P/E and just 0.7% upside to the average target cap the move
2bKey Metrics
Financials are for Q3 2026 (ended 8/31, fiscal Q4). That quarter has 16 weeks and the others 12, so comparing quarterly revenue directly makes it look larger. The $13.30B special dividend announced Nov 10 is not yet deducted from the $21.30B of cash and short-term investments at 8/31. Yahoo's total debt may include lease liabilities. Annual revenue and net income growth (+10.1%, +13.9%) uses Yahoo's annual statements for the years ended Aug 2026 and Aug 2025 ($303,154M vs $275,235M; $9,226M vs $8,099M)
Business & Competitive Advantage
Membership warehouse clubs are the core business, with TTM revenue of $303.15B and an operating margin of 3.9%
3aBusiness Structure
TTM revenue $303.15B · operating margin 3.9%
Report that digital sales outpace store comps (Zacks headline, Nov 9)
Report that Costco passed Kroger in a grocery ranking (TheStreet headline, Nov 10)
Medicare Advantage plan launch report (24/7 Wall St. headline, Nov 10)
- Shareholder returns · $30 special dividend ($13.30B in total) announced Nov 10 · $4B buyback program reauthorized (company press release headline)
- Results · Q3 2026 (fiscal Q4) revenue $95.72B (+11.1%) · Dec 10 consensus revenue $74.38B and EPS $4.92
- Board · Director Helena Foulkes resigned Nov 7 (8-K Item 5.02) · sat on the Audit and Nominating and Governance committees · the 8-K states it was not due to a disagreement
- Industry · Report of higher Sam's Club traffic (Zacks headline, Nov 10) · Walmart TTM P/E 45.3x
3bCompetitive Advantage (Moat) Assessment
Six sources rated Strong·Medium·Weak
TTM revenue of $303.15B dwarfs peer BJ's, whose market cap is $13.96B
Operating margin of 3.7–4.0% is thin but stable over five quarters
Cash and short-term investments of $21.30B vs total debt of $8.58B and equity of $35.80B
Annual revenue +10.1% and EPS +14.0%; consensus FY27 growth is +9.9%
Walmart (TTM P/E 45.3x) with rising Sam's Club traffic and grocery price competition
Forward P/E of 45.8x is 2.8 times the peer median of 16.6x
Scale and financial strength are high, but the elevated multiple already reflects much of that strength
Earnings & Financials
Annual revenue of $303.15B rose 10.1% and net income of $9.23B rose 13.9%, and cash and short-term investments of $21.30B exceed total debt of $8.58B at 8/31
4aRevenue & Earnings
| Q3 2025 | Q4 | Q1 2026 | Q2 | Q3 | |
|---|---|---|---|---|---|
| Revenue | 86.2 | 67.3 | 69.6 | 70.5 | 95.7 |
| Operating Income | 3.3 | 2.5 | 2.6 | 2.8 | 3.8 |
| Net Income | 2.6 | 2 | 2 | 2.2 | 3 |
| Operating Margin | 3.9% | 3.7% | 3.7% | 4.0% | 4.0% |
The operating margin moved 3.9% → 3.7% → 3.7% → 4.0% → 4.0%. Q3 2026 is a 16-week quarter, so its revenue and profit are larger than the 12-week quarters; against the 16-week quarter a year earlier, revenue rose 11.1% and operating income 13.8% (Yahoo Finance)
4bCash Flow
| Annual (FY ends August) | Aug 2023 | Aug 2024 | Aug 2025 | Aug 2026 |
|---|---|---|---|---|
| Operating Cash Flow | 11.1 | 11.3 | 13.3 | 15.8 |
| Capex | 4.3 | 4.7 | 5.5 | 6.4 |
| Free Cash Flow | +6.7 | +6.6 | +7.8 | +9.4 |
4cFinancial Structure
| Item | Now | Aug 2025 | Change |
|---|---|---|---|
| Cash and short-term investments (8/31) | $21.30B | $15.28B | +39.4% |
| Total debt (8/31) | $8.58B | $8.25B | +4.0% |
| Equity (8/31) | $35.80B | $29.16B | +22.8% |
| Shares outstanding (8/31) | 443M | 443M | 0.0% |
4dProfitability Metrics
| Metric | Q3 | Year ago | Calculation |
|---|---|---|---|
| Operating margin | 4.0% | 3.9% | Operating income ÷ revenue |
| Net margin | 3.1% | 3.0% | Net income ÷ revenue |
| Operating cash flow margin | 4.9% | 4.5% | Operating cash flow ÷ revenue |
| Free cash flow margin | 2.6% | 2.2% | Free cash flow ÷ revenue |
Valuation
TTM P/E of 51.4x and forward P/E of 45.8x are more than twice the peer medians of 24.2x and 16.6x, and the PEG on 12.0% next-12-month EPS growth is 3.8
5aP/E trend
TTM diluted EPS (4.50, 4.58, 4.93 and 6.75) sums to $20.76, so TTM P/E is 51.4x, matching Yahoo's figure. Year-end P/E is the year-end close ÷ annual diluted EPS (38.8x in 2023, 53.9x in 2024, 51.8x in 2025). Forward P/E of 45.8x uses next-12-month EPS of $23.26; on FY27 (Sep 2026–Aug 2027) EPS of $22.81 it is 46.7x
The Nov 10 close of $1,066.14 is 51.4x TTM EPS of $20.76 and 45.8x next-12-month EPS of $23.26. Both are more than twice the peer medians (24.2x and 16.6x), and the PEG on 12.0% next-12-month EPS growth is 3.8
5bPrice Range · 52-Week vs. External Targets
52-week range is intraday (low 12/16 · high 5/19) · External price targets: Yahoo Finance, 37 analysts (Buy 25·Hold 14·Sell 2)[S4]
5cPeer Multiples Comparison
| Company | PER (TTM) | Forward PER | P/S | Market Cap |
|---|---|---|---|---|
| Costco COST | 51.4x | 45.8x | 1.6x | $472.44B |
| Walmart WMT | 45.3x | 39.9x | 1.4x | $997.12B |
| Target TGT | 16.8x | 16.5x | 0.7x | $73.50B |
| BJ's Wholesale BJ | 24.2x | 22.3x | 0.6x | $13.96B |
| Dollar General DG | 17.9x | 16.6x | 0.7x | $30.29B |
| Kroger KR | 37.3x | 12.7x | 0.3x | $42.30B |
Nov 10 close · Peer medians: TTM P/E 24.2x, forward P/E 16.6x, P/S 0.7x (five peers) · Costco P/S 1.6x[S7] · Five US-dollar peers (WMT, TGT, BJ, DG, KR), Yahoo Finance values · Kroger's 12.7x forward P/E reflects sharply higher expected earnings and is included in the median
Chart & Options
The $1,066.14 close is above the 5-, 20-, 60-, 120- and 200-day averages and 2.8% below the 52-week high of $1,096.50, with RSI at 69.6
6aKey Price Levels Above and Below Current Price
Each colored bar matches the same-colored line on the chart; the percentage is the distance from the current price (green above · red below)
6bTechnical Indicators
6cOptions Market
Yahoo options as of collection time · call volume share 42.0% · max pain $1,042.50 for Nov 13 expiry and $980 for Nov 20
News & Schedule
After the Nov 10 close Costco announced a $30 special dividend and a renewed $4B buyback, and on Nov 5 JPMorgan raised its target to $1,150
7aNews
11/11 Volume 1.56M shares
11/10 Volume 1.56M shares
11/5 Volume 4.73M shares
10/15 Volume 3.00M shares
10/13 Volume 1.42M shares
9/29 Volume 2.41M shares
9/25 Volume 4.63M shares
7bUpcoming Events
Macro
The 4.98% 10-year yield is more than twice the 2.2% forward earnings yield, while December WTI fell 10.5% in a week
Wall Street View
The average target of $1,073.35 from 37 analysts is 0.7% above the close, and recent changes are four raises and one cut
9aExternal Target Price Range
9bRecent Opinions by Firm
| Institutions | Opinion | Previous | Target Price | Change | vs. Close |
|---|---|---|---|---|---|
| JPMorgan | Buy | 1,015 | 1,150 | Target raised | +7.9% |
| CICC | Buy | New | 1,050 | Initiation | −1.5% |
| Tigress Financial | Buy | 1,065 | 1,250 | Target raised | +17.2% |
| RBC Capital | Hold | 1,000 | 1,000 | Maintained | −6.2% |
| Deutsche Bank | Buy | 1,091 | 1,079 | Target cut | +1.2% |
Yahoo Finance: 37 analysts' targets, average $1,073.35 (high $1,315, low $770) · ratings from 41: 25 Buy, 14 Hold, 2 Sell · Nov 11 headlines: Bernstein $1,143→$1,155, Mizuho $1,065→$1,100 (not in the table)[S4]
Risk Analysis
The two biggest risks are a high multiple against slowing growth and a miss against Dec 10 earnings expectations
| Risk | Type | Likelihood | Impact | Dates to Watch |
|---|---|---|---|---|
| High multiple against slowing growth (forward P/E 45.8x vs EPS growth around 10%) | Price | Medium | High | Dec 10 earnings |
| Fiscal Q1 revenue and EPS miss the consensus ($74.38B and $4.92) | Earnings | Medium | High | Dec 10 earnings |
| Higher rates (10-year yield 4.98%, earnings yield 2.2%) | Price | Medium | Medium | Next rate data |
| Cash falls after the special dividend ($21.30B to about $8B) | Financial | Medium | Medium | Dec 4 payment |
| Ex-dividend adjustment ($30 per share after the Nov 24 record date) | Price | High | Low | Nov 24 record date |
| Board change (Director Foulkes resigned, successor not named) | Financial | Low | Low | Next 8-K |
Likelihood and impact rated High·Medium·Low · When it clears: When it resolves: Nov 24 record date · Dec 4 payment · Dec 10 fiscal Q1 results · Nov 13 and Nov 20 options expiries
Checkpoints & Open Questions
The two key checks are the price adjustment after the Nov 24 record date and the Dec 10 fiscal Q1 report
11aCheckpoints
11bOpen Questions
Sources & Data Dates
Figures without a source are not published.
| ID | Type | Provider | Content | As-of Date |
|---|---|---|---|---|
| S1 | Price and indicators | Yahoo Finance | Closes, moving averages, RSI, 52-week range, Supertrend, Bollinger bands | 2026.11.11 |
| S2 | Financials | Yahoo Finance quarterly and annual statements (through the year ended Aug 2026) | Quarterly revenue, earnings, cash flow, balance sheet, share count | 2026.11.11 |
| S3 | SEC filings | SEC EDGAR 8-K 2026.11.10 https://www.sec.gov/Archives/edgar/data/909832/000090983226000134/cost-20261107.htm | Confirmed $30 special dividend (declared Nov 10, record Nov 24, payable Dec 4) and director Foulkes' Nov 7 resignation. Sep 24 8-K (Item 2.02) and Oct 14 8-K (Item 8.01) checked by item number only | 2026.11.11 |
| S4 | Price targets and consensus | Yahoo Finance | Rating distribution, price targets, five changes | 2026.11.11 |
| S5 | Options | Yahoo Finance | Put/call ratio, volume by strike, max pain | 2026.11.11 |
| S6 | Insider trades | Yahoo Finance (Form 4 summary) | Last 60 days: three officers sold $3.80M, no purchases, many stock awards on Oct 22 | 2026.11.11 |
| S7 | Peer comparison | Yahoo Finance | P/E and P/S of WMT, TGT, BJ, DG and KR | 2026.11.11 |
| S8 | News and reports | Yahoo Finance news headlines (GlobeNewswire, Simply Wall St., MT Newswires Nov 11, Barron's, Zacks, TheStreet), search summaries | Special dividend and buyback reauthorization, Bernstein and Mizuho targets (headlines only), competition and consumer reports | 2026.11.11 |
Price as of the Nov 10, 2026 close (last completed close) · Financials Q3 2026 (Yahoo Finance) · Next earnings Dec 10, 2026 (Yahoo) · The special dividend announced after the Nov 10 close is not in the price
※ Based on research team debate tally · Tally · Of six issues: Bull 3 (special dividend, the core issue worth 2 votes, plus targets 1 vote), Bear 3 (valuation, rates, price action = 3 votes), on hold 1 (Dec 10 earnings, 0 votes). Fewer than two holds, so no bonus; a 3–3 tie gives HOLD