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 for the 16 weeks ended late last month, driven by a 10.7% increase in U.S. comparable-store sales. Ahead of its Sept. 24 earnings release, investors are focused on profitability and the prospect of a record special dividend, following Costco's $15-per-share payout in December 2023. The company has raised its regular dividend for 22 consecutive years, although its current yield is only about 0.7%.

Analysis

The investable question is not the prospective cash distribution, which is economically neutral on the ex-date, but whether management can sustain premium sales productivity while preserving merchandise margins and membership-fee economics. A larger-than-expected payout would confirm excess cash generation, yet it may also highlight that incremental store, digital, and international reinvestment opportunities are not absorbing the balance sheet. For a stock that typically commands a quality premium, the earnings reaction will be driven more by renewal rates, traffic versus ticket, gross-margin progression, and forward new-unit cadence than by the size of a one-time payment.

Near term, strong value-oriented traffic is a relative read-through for COST versus broad discretionary retail, but it is not automatically bullish for suppliers: Costco's scale lets it retain part of vendor deflation and negotiate lower unit costs. WMT and BJ are the closest competitive beneficiaries from value-seeking consumers, while XRT's more discretionary and lower-frequency retailers remain vulnerable to share loss. Over 6-18 months, sustained share gains could pressure branded CPG vendors with concentrated Costco exposure unless volume growth offsets tighter pricing.

Consensus may overvalue a special-dividend announcement as a catalyst. A declaration can create retail demand before the record date, but the subsequent mechanical price adjustment and eventual reversion to fundamental valuation make it a poor standalone reason to own the shares. The bullish thesis is falsified if U.S. traffic decelerates materially, renewal metrics weaken, or gross-margin gains fail to convert sales growth into operating leverage; conversely, evidence that membership income and international units are accelerating would justify further multiple support.

Key Decisions for Investors

• Do not initiate or add to COST solely ahead of a potential special dividend; treat any pre-record-date rally as an opportunity to reduce tactical exposure rather than a cash-return arbitrage.
• For a 1-3 month relative-value expression, monitor long COST / short XRT only after earnings confirm traffic-led share gains and stable gross margin. Exit if comparable-sales momentum slows materially or management signals increased promotional pressure; the pair avoids taking broad consumer-beta risk.
• Use WMT and BJ as competitive read-throughs rather than automatic shorts: if COST's traffic strength is accompanied by stable ticket and margins, maintain a constructive view on warehouse/value retail broadly. A traffic-led result with deteriorating merchandise margin instead favors WMT, whose higher grocery mix is more defensive.
• Set an earnings watch item for renewal rate, membership-fee income, gross margin, inventory growth, and next-year unit openings. Without those data and current implied-volatility pricing, avoid a pre-earnings COST options position.