Costco Stock Is Priced For Two Good Years, Is That A Safe Bet

Costco Wholesale (COST) trades at about $928 a share, roughly 43.5 times the last twelve months of adjusted earnings, meaning normalized net income with stock-based compensation added back, a basis meant to sit closer to what analysts use in their forecasts. For a warehouse retailer, that is a growth company's price. What it leaves out is what analysts expect Costco to earn by fiscal 2028.

What That Price Is Actually Buying

Costco booked $293.59 billion of revenue over the past year, and very little of the case for owning it rests on what it makes per item. It rests on the membership base underneath. Fee income grew 10.7% year over year in fiscal Q3 2026, or 7% excluding the September 2024 fee increase and currency, and paid executive memberships, the tier that management says spends more, reached 41.2 million.

Costco feeds that base with things it deliberately underprices. Its gas stations set company volume records in fiscal Q3 2026 as pump prices spiked, and management says members who buy fuel there visit more often, spend more, and renew at a higher rate. The warehouse is the hook. The renewal is the annuity.

But Costco Does Not Have To Grow Faster Than It Already Is

On what analysts expect Costco to earn in fiscal 2027, today's price is about 40.9 times earnings. On the fiscal 2028 estimate, the same price is about 37.2 times. Both are forecasts. Neither is a result.

Getting there does not require Costco to speed up. Consensus has revenue growing about 8.0% a year through fiscal 2028, and over the past twelve months Costco's revenue grew 9.2%. August net sales came in 9.9% above a year earlier. The forecast asks the top line for a little less than the company has been delivering. That still leaves the stock priced for perfection on margin, not on growth

So Where Does Costco Find The Extra Margin?

The profit half is harder. Between the fiscal 2027 and fiscal 2028 estimates, consensus has earnings growing faster than revenue, so it assumes margins keep widening. That runs against Costco's own rule, which is to be first to lower prices and last to raise them.

It follows the rule. In fiscal Q3 2026, Costco cut prices on everyday items including eggs and beef, widened its gas price gaps, and core margins on its core merchandise fell 9 basis points. Kirkland Signature is built for the same job, priced at least 15% to 20% below the national brand equivalent.

So the margin has to widen somewhere other than the markup, and so far it has. The operating margin over the past twelve months was 3.8%, against a three-year average of 3.6%. In fiscal Q3 2026, higher e-commerce and pharmacy penetration, not the shelf price, lifted the ancillary margin. Twenty-one analysts carry the fiscal 2028 estimate, and their numbers run from $23.73 to $26.92 a share. The figure the multiple above rests on is somebody's average view of a year that has not happened.

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