5 Reasons to Buy Costco Stock Like There's No Tomorrow

Costco shares have slid about 14% over six months, but underlying fundamentals remain strong: fiscal Q4 sales rose 8% to $86.1 billion and EPS climbed 11% to $5.87 despite a slight miss on U.S. same-store sales (6% vs. 6.1% expected). Recurring membership revenue is robust — membership income surged 17% in Q4 to $1.7 billion and rose 10% for fiscal 2025 to $5.3 billion, with a 92% U.S./Canada renewal rate and an affluent member base (avg. household income ~$125k) that should be less cyclical. Growth initiatives — 27 new stores opened in fiscal 2025 with 35 planned, plus e-commerce up 13.5% in Q4 and accounting for 7% of sales ($19.6 billion for fiscal 2025) — support durable cash flow and a defensive long-term investment case despite near-term share weakness.

Analysis

Costco's shares have fallen about 14% over the past six months despite fiscal Q4 results that showed revenue up 8% to $86.1 billion and EPS rising 11% to $5.87; the stock decline followed a narrow miss on U.S. same-store sales (6.0% vs. 6.1% expected) that appears to have amplified already-high market expectations. Membership income is a clear strength: Q4 membership fees jumped 17% to $1.7 billion and fiscal 2025 membership income rose 10% to $5.3 billion, supported by a 92% renewal rate in the U.S. and Canada and an estimated average member household income of $125,000. Growth initiatives underpin the operational outlook with 27 new stores added in fiscal 2025, 35 planned openings, and e-commerce sales up 13.5% in Q4 to $19.6 billion (7% of total sales). The combination of recurring membership revenue, an affluent and sticky customer base, and omnichannel expansion supports a defensive, cash-generative profile, but investors should monitor same-store comps, membership trends and macro signals (rising layoffs and slower GDP) that could pressure 2026 performance or margins if the economy weakens further.

Key Decisions for Investors

• Consider accumulating a long-term position incrementally on the pullback given solid Q4 revenue (+8%) and EPS (+11%) and strong membership income growth, but avoid full allocation on a single purchase
• Monitor U.S. same-store sales and membership income/renewal rates in upcoming quarters as primary triggers to add to or trim exposure, with a miss or deterioration signalling elevated downside risk
• Watch execution on store openings and e-commerce growth (27 opened, 35 planned, e-commerce +13.5% and $19.6B) as indicators of sustained top-line expansion before materially increasing position size
• Manage tail risk via position sizing or hedges (e.g., protective puts or covered calls) if macro indicators (rising layoffs, slowing GDP) continue to deteriorate and begin to impact comps or margins