1 Incredible Reason to Buy Costco Stock Before It Reports Earnings on Sept. 24.

Costco reported fiscal fourth-quarter period net sales growth of 11.3% to $93.9 billion, driven by a 10.7% increase in U.S. comparable-store sales, ahead of its Sept. 24 earnings release. Investors are focused on whether Costco will signal another special dividend, following its $15-per-share payout in December 2023 and a historical pattern of distributions every two to three years. A potential record special dividend later in 2026 would provide an additional capital-return catalyst, though it is not expected to be formally announced with next week's results.

Analysis

The prospective cash distribution is not incremental value creation: COST should decline by roughly the distribution amount on the ex-date, while the cash was already embedded in enterprise value. The near-term setup is therefore less a dividend trade than an earnings-quality test: a premium multiple requires evidence that traffic, renewal economics, and merchandise margins—not just ticket inflation or fuel—are sustaining operating leverage. A larger-than-expected payout could briefly attract retail demand, but it also reduces a balance-sheet buffer that has supported flexibility on price investments and new-club growth.

The more relevant competitive read-through is pressure on BJ and, indirectly, WMT's Sam's Club. If COST demonstrates that elevated domestic sales are converting into higher gross margin while retaining low pricing, it implies scale-driven purchasing advantages are widening; BJ is the cleaner public relative short because it has less vendor leverage and a more price-sensitive member base. Conversely, any margin miss despite strong sales would expose the cost of defending value perception and challenge the assumption that warehouse retail can monetize share gains without reinvestment.

Over the next several days, consensus attention will likely center on a possible payout rather than the composition of earnings, creating downside asymmetry if management signals higher shrink, wage, freight, or membership-acquisition costs. Over 1-3 months, the key catalyst is whether management raises its outlook for membership income and core merchandise margin; absent that, a special-dividend announcement should not justify multiple expansion. The thesis is falsified by accelerating renewal rates, sustained margin expansion, and guidance that new-club returns remain intact after incremental price investments.

Key Decisions for Investors

• Do not buy COST solely ahead of a potential special dividend; treat any announcement-driven strength as an opportunity to reduce tactical exposure unless earnings guidance also improves on membership income and gross margin. The ex-dividend adjustment limits standalone return potential.
• Event watch: initiate a modest long COST / short BJ pair only after earnings if COST shows margin expansion alongside strong renewal trends. Target a 5-8% relative move over 1-3 months; exit if BJ reports comparable traffic or margin resilience, or if COST's merchandise margin contracts.
• For existing COST longs, set a post-earnings risk trigger around any reduction in operating-margin or new-club-return commentary. Strong sales with weaker profitability would be the more consequential negative surprise than a delayed or smaller cash payout.
• Monitor WMT's next Sam's Club disclosure for membership and comparable-sales momentum. Confirmation of broad warehouse-club strength would weaken the COST-versus-BJ share-gain thesis and argues for closing the relative trade rather than adding outright retail exposure.