Costco stock price shocks market despite major blowout quarter

Costco (COST) just put up one of the cleanest quarters in retail, but the stock fell anyway.

The retail giant set fresh records at the gas pump, leaned on a fast-growing online business, and kept members renewing at rates most retailers can only envy.

Yet shares slid in the days after the report, and that gap between the results and the reaction is the real story for anyone holding COST or weighing a buy.

Costco's record quarter met a market focused on valuation

The numbers were strong almost everywhere you looked.

Net sales rose 11.6% to $69.15 billion, and total revenue of $70.53 billion came in ahead of Wall Street's estimate, CNBC reports.

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So, what went wrong?

Adjusted earnings of $4.93 a share grew 15% from a year earlier, and while that topped some Wall Street expectations, it trailed others by a penny or two, Yahoo Finance data shows.

For a stock priced near record highs, the market left no room for error and wouldn't spare even the slightest miss.

Investors had already turned cautious in the lead-up to the release of COST's earnings report, and shares fell close to 5% in the week that followed.

Marvin Samuel Tolentino Pineda / Getty Images

What powered Costco's fiscal third quarter

Gasoline did much of the heavy lifting.

Costco said the final five weeks of the quarter produced its best-ever volume weeks as drivers hunted for cheaper fuel, according to Costco's earnings release.

The online side is where the growth story gets interesting.

Digitally enabled sales jumped 21.5%, and app and website traffic climbed 37%, while personalized recommendations added close to $5 billion in e-commerce sales, The Motley Fool reported.

The membership machine kept humming, with fees up 10.7% to $1.37 billion and renewals above 92% in the U.S. and Canada, TipRanks noted.

That high-margin fee income is the cash that lets Costco price everything else aggressively, a strength Bank of America has highlighted for months.

Costco fiscal Q3 2026 scorecard

• Net sales up 11.6% to $69.15 billion; total revenue $70.53 billion
• Adjusted earnings per share of $4.93, up 15% year over year
• Comparable sales up 6.6% excluding gas prices and currency swings
• 148.5 million cardholders and an 89.7% worldwide renewal rate
• Pharmacy was a standout on strong GLP-1 demand
  
  Source: Costco (COST) Q3 Earnings Transcript | The Motley Fool

How Costco's stock price compares with Walmart's and Amazon's

Costco trades around 42 times its expected fiscal 2027 earnings, well above Amazon at under 28 times and Walmart near 35 times.

This means investors are paying a steep premium for consistency.

Related: BofA revisits Costco stock price target after= sales surprise

That premium has mostly worked, as COST is up about 10% in 2026 even after the pullback.

This is roughly in line with the S&P 500, and analyst targets still sit above current levels, ranging from Truist's $1,011 to UBS's $1,275, Benzinga data shows.

The backdrop matters too.

With Wall Street lifting its S&P 500 targets on strong earnings, a steady performer like Costco competes for dollars against cheaper, faster-growing stocks.

What needs to happen for Costco stock to earn its premium

For the bulls, the path is narrow but clear.

Costco does not need another blowout to work from here. It needs to keep compounding while the valuation cools into its growth.

The risks are just as concrete. A rich multiple leaves little cushion if membership growth normalizes, gas prices retreat, or tariffs press on margins.

What Costco bulls still need to see

• Steady high-single-digit comparable sales without a gasoline tailwind
• Renewal rates holding near record levels as fees rise
• Digital and pharmacy momentum continuing to scale
• An earnings multiple that drifts lower as profits catch up

None of that requires accelerating growth, just steady compounding, which is why it's reasonable for long-term holders to sit tight.

New buyers may get a better entry by waiting for the next pullback rather than chasing the premium today.

Related: Costco membership offers key feature many members miss

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This story was originally published June 4, 2026 at 7:47 PM.