Costco Stock Could Surprise Investors Over the Next Several Years

24/7 Wall St. rates Costco Buy with 90% confidence and a $1,034.74 price target, 10.88% above its $933.21 reference price. Fiscal 2026 revenue was $303.15B, up 10.14%, while Q4 revenue of $95.72B and EPS of $6.75 beat estimates; the EPS included a $0.15 tariff-refund benefit. The bullish case cites 6.7% comparable-sales growth, strong membership renewal and 33 planned warehouse openings in fiscal 2027, while slower membership-fee growth, a gross-margin decline to 11.02% and higher capex are risks.

Analysis

The bullish case is less about busy warehouses than whether member economics can keep compounding fast enough to support a premium multiple. Fee-growth deceleration matters because it removes a relatively high-quality earnings tailwind; if spending per member and renewal rates do not compensate, investors may re-rate COST before reported sales weaken. The tariff refund also flatters the quarter’s EPS comparison, while the LIFO charge makes reported gross margin a noisy signal: track core margin, not the headline alone. Rising capex is a near-term cash-flow drag, but successful openings can add capacity and member acquisition over several years; execution and returns on new warehouses are the key bridge.

Near term, the article’s model target is not an independently verifiable catalyst, so packed lots and estimate beats may already be reflected in a roughly 41x forward multiple. Over 1–3 months, watch membership-fee income, spend per member, renewal rates, and guidance for warehouse openings. Over 6–18 months, sustained member growth and productive openings could justify the premium; weakening renewal/spend or margin deterioration would expose multiple-compression risk. WMT is a plausible relative-value hedge, but its broader retail mix makes it an imperfect offset. BJ’s weaker reported comp momentum supports Costco’s relative operating case, not automatically a short without valuation and positioning data. The contrarian risk is that investors treat loyalty as durable pricing power even as fee growth slows; the opposite risk is over-reading temporary margin noise.

Key Decisions for Investors

• Do not chase COST solely on the article’s price target. At the cited reference price, prefer waiting for a valuation reset or clearer evidence that member spending offsets slower fee growth; the target methodology and assumptions are not supplied.
• For a relative-value watch, consider a modest long COST / short WMT pair only after checking current valuation spread, beta, and positioning. The thesis is faster Costco growth; exit or reassess if Costco’s comparable-sales advantage narrows materially while its premium remains.
• Track the next earnings release for renewal rates, fee income, spend per member, core gross margin, and capex/opening execution. A sustained renewal decline, weaker spend, or guidance setback would falsify the loyalty-led premium thesis; improving member economics alongside stable core margins would strengthen it.
• No standalone options trade is warranted from this article: it provides no event-volatility or implied-volatility data, and the cited quarter includes both a tariff-refund benefit and a LIFO-related margin distortion.