Costco Wholesale Corporation, together with its subsidiaries, engages in the operation of membership warehouses in the United States, Puerto Rico, Canada, Mexico, Japan, the United Kingdom, Korea, Australia, Taiwan, China, Spain, France, Iceland, New Zealand, and Sweden. The company offers branded and private-label products in a range of merchandise categories. It offers merchandise, such as sundries, dry groceries, candies, coolers, freezers, deli, liquor, and tobacco; appliances, electronics, health and beauty aids, hardware, garden and patio products, sporting goods, tires, toys and seasonal products, office supplies, automotive care products, postages, tickets, apparel, small appliances, furniture, domestics, housewares, special order kiosks, and jewelry; and meat, produce, service deli, and bakery products. The company also operates gasoline, pharmacies, optical, food courts, hearing-aid centers, and tire installation centers; and offers business delivery, travel, grocery, and various other services online. It also operates e-commerce websites. The company was formerly known as Costco Companies, Inc. and changed its name to Costco Wholesale Corporation in August 1999. Costco Wholesale Corporation was founded in 1976 and is based in Issaquah, Washington.

Costco Wholesale Corporation

In this video, I will go over some of Wall Street's analysts' top picks for 2026, such as Wedbush's Dan Ives. Watch the short video to learn more, consider subscribing, and click the special offer link below.
*Stock prices used were from the trading day of Dec. 30, 2025. The video was published on Dec. 30, 2025.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
Should you buy stock in Amazon right now?
Before you buy stock in Amazon, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Amazon wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $505,641!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,143,283!*
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Neil Rozenbaum has positions in Amazon and Micron Technology. The Motley Fool has positions in and recommends Amazon, Costco Wholesale, Nvidia, and Oracle. The Motley Fool recommends FedEx and Reddit. The Motley Fool has a disclosure policy. Neil is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

These Are The Stocks To Buy In 2026 According to Analysts

Among the underlying components of the Russell 3000 index, we saw noteworthy options trading volume today in Costco Wholesale Corp (Symbol: COST), where a total of 40,826 contracts have traded so far, representing approximately 4.1 million underlying shares. That amounts to about 137.4% of COST's average daily trading volume over the past month of 3.0 million shares. Especially high volume was seen for the $860 strike call option expiring January 02, 2026, with 3,199 contracts trading so far today, representing approximately 319,900 underlying shares of COST. Below is a chart showing COST's trailing twelve month trading history, with the $860 strike highlighted in orange:
Robinhood Markets Inc (Symbol: HOOD) saw options trading volume of 285,438 contracts, representing approximately 28.5 million underlying shares or approximately 128.3% of HOOD's average daily trading volume over the past month, of 22.2 million shares. Especially high volume was seen for the $110 strike put option expiring February 20, 2026, with 15,001 contracts trading so far today, representing approximately 1.5 million underlying shares of HOOD. Below is a chart showing HOOD's trailing twelve month trading history, with the $110 strike highlighted in orange:
And Howard Hughes Holdings Inc (Symbol: HHH) options are showing a volume of 4,892 contracts thus far today. That number of contracts represents approximately 489,200 underlying shares, working out to a sizeable 122.1% of HHH's average daily trading volume over the past month, of 400,760 shares. Especially high volume was seen for the $70 strike put option expiring January 16, 2026, with 2,642 contracts trading so far today, representing approximately 264,200 underlying shares of HHH. Below is a chart showing HHH's trailing twelve month trading history, with the $70 strike highlighted in orange:
For the various different available expirations for COST options, HOOD options, or HHH options, visit StockOptionsChannel.com.
Also see:
Funds Holding WMB
NREF Insider Buying
NUZE YTD Return
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Notable Friday Option Activity: COST, HOOD, HHH

Key Points
Amazon is seeing strong operating leverage in its e-commerce business, while AWS growth is starting to accelerate.
Philip Morris International is a strong growth stock in a defensive industry.
Both stocks are attractively valued.
Investors have been encouraged to double down on stocks they own that are down, but it can also be a smart move to add to stocks you own, even when you already have gains in them. This is an often overlooked strategy, but one that can be effective.
Let's look at two growth stocks you can double up on right now.
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Amazon
Amazon's (NASDAQ: AMZN) stock isn't too far from its highs, but it also hasn't moved a whole lot over the past five years, up less than 40%. However, now may be a good time to add to positions in the stock heading into 2026.
The company is already seeing strong operating leverage in its e-commerce business, as demonstrated by its North American segment's adjusted operating income climbing 28% last quarter on just an 11% increase in sales. This stems from its embrace of robots and artificial intelligence (AI).
While Amazon is widely known to have the world's largest e-commerce and cloud computing businesses, it is also the biggest operator and manufacturer of industrial robots. It just doesn't get the credit it deserves in this area, since it makes the robots for its own use. However, it's making big advancements in this area and deploys more than 1 million robots in its fulfillment centers, all coordinated by its DeepFleet AI model.
Amazon has also become one of the leading digital marketing companies in the world through its sponsored ad program. The company is using AI in this business to help merchants create better campaigns and improve targeting. As a result, this was one of its fastest-growing businesses in Q3, with revenue for this high-gross-margin service climbing 24%.
Meanwhile, its cloud computing unit, AWS, could be its biggest catalyst next year. The segment has been growing quickly and is starting to see revenue accelerate. With capacity constrained and demand for AI services growing, the company is investing heavily in capex to build out its AI data center footprint, which should drive strong revenue growth next year.
With Amazon's stock trading at a forward price-to-earnings (P/E) ratio less than 30 times 2026 analyst estimates, the stock is attractively valued both historically and versus retail peers like Walmart and Costco Wholesale, making it a great stock to double up on.
Philip Morris International
Philip Morris International (NYSE: PM) stock has had a strong year, up around 35%, but it's off its highs and has been stuck in neutral since the summer. Meanwhile, the company is a unique growth stock in a defensive industry, which makes it a strong candidate to double up on.
Philip Morris benefits from not selling cigarettes in the rapidly declining U.S. market. International markets are seeing volumes hold up much better, while the company continues to see strong pricing power across the globe. However, it is the company's smokeless portfolio that is powering its growth.
Its popular nicotine pouch brand, Zyn, is leading the way. Shipments in its main U.S. market soared 37% last quarter, while retail sales volumes (offtake) jumped by 39%. The product is finally no longer capacity-constrained, and Philip Morris is beginning to invest more in promotions to help drive growth. Meanwhile, global shipments outside its original Nordic markets more than doubled.
The company's heated tobacco offering, Iqos, is also seeing strong growth in international markets. Volumes grew 15.5% in Q3, led by growth in Japan and Europe and increasing strength in new markets.
Meanwhile, the company has a big opportunity after buying back its rights to sell the product in the U.S. It's currently waiting for approval from the FDA for its new Iluma delivery system before a full launch in the U.S. The best thing about Philip Morris' Zyn and Iqos growth is that both products have much better unit economics than its traditional cigarettes, helping drive gross margin and profits.
Philip Morris stock is also attractively valued, trading at around a forward P/E ratio of under 19.5, based on the analyst consensus for 2026, and a price/earnings-to-growth (PEG) ratio of 0.85. Stocks with positive PEG ratios below 1 are generally considered undervalued.
Its valuation and growth prospects make the stock a top option to double up on.
Should you buy stock in Amazon right now?
Before you buy stock in Amazon, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Amazon wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $505,641!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,143,283!*
Now, it’s worth noting Stock Advisor’s total average return is 974% — a market-crushing outperformance compared to 193% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of January 2, 2026.
Geoffrey Seiler has positions in Amazon and Philip Morris International. The Motley Fool has positions in and recommends Amazon, Costco Wholesale, and Walmart. The Motley Fool recommends Philip Morris International. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

2 Top Stocks to Double Up on Right Now

Key Points
Costco outperformed the S&P 500 over the last 10 years by a wide margin.
Much of the stock's previous 10-year return was due to an increase in the price-to-earnings multiple.
Costco Wholesale (NASDAQ: COST) has been a rewarding investment for investors. It would have made early investors millionaires, but even if you had bought the stock in 2015, you would still be outperforming the S&P 500.
A $1,000 investment in Costco stock 10 years ago would be worth about $6,400 today, assuming you bought more shares with the dividend. This beats the $4,000 you would have earned investing in an S&P 500 index fund.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now, when you join Stock Advisor. See the stocks »
But what about an investor buying shares today? Here's what an investor can reasonably expect to earn over the next 10 years.
Is Costco stock a buy?
Costco has been steadily growing its member base for years, and it currently has 146 million cardholders. It may have a long runway for continued growth, particularly as it expands its store presence in the U.S. and internationally.
However, investors should be aware that much of the stock's return over the last 10 years was due to investors paying a higher multiple for the company's earnings per share. Costco's price-to-earnings ratio has increased by more than 50% since 2015, and is currently trading at 46 times its trailing-12-month earnings.
The stock's valuation is currently high, which may limit upside over the next few years. Costco is growing its earnings at approximately 10% year over year, and the consensus analyst estimate projects long-term earnings growth of 9%. If the stock is still trading at 46 times earnings, this would turn a $1,000 investment today into approximately $2,600 in 10 years, excluding dividends.
Should you buy stock in Costco Wholesale right now?
Before you buy stock in Costco Wholesale, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Costco Wholesale wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $505,749!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,149,658!*
Now, it’s worth noting Stock Advisor’s total average return is 979% — a market-crushing outperformance compared to 195% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

If You'd Invested $1,000 in Costco 10 Years Ago, Here's Your Return Today

Walmart Inc. WMT delivered a solid contribution from its membership business in the third quarter of fiscal 2026 as membership income increased 17% year over year, reinforcing the growing importance of fee-based revenues within the company’s operating model. Membership and other income rose 9% overall during the quarter, reflecting steady momentum across multiple regions and formats.
The increase was driven by strength across Walmart’s platforms. International membership income climbed 34%, led primarily by Sam’s Club China, where member engagement and penetration continued to expand. In the United States, Walmart Plus membership income grew at a double-digit rate, supported by strong net additions and improved service offerings. Sam’s Club U.S. also posted membership income growth of 7%, aided by gains in member counts, renewal rates and Plus member participation.
Management highlighted that membership fees, combined with advertising income, accounted for roughly one-third of consolidated adjusted operating income in the quarter. This underscores the higher margin profile of these revenue streams compared with traditional merchandise sales, particularly at a time when grocery and health-related categories continue to weigh on the overall mix.
Walmart Plus recorded its strongest quarter of net additions since the program launched. Growth was supported by faster delivery speeds, higher service levels and the rollout of new benefits such as the OnePay cash rewards credit card and expanded streaming options. These enhancements helped drive member engagement and retention during the period.
Overall, the 17% rise in membership income highlights Walmart’s increasing reliance on recurring fee revenues as a meaningful contributor to profitability, even as mix pressures persist elsewhere in the business.
How TGT & COST Leverage Membership Fees to Support Profits
Target Corporation TGT is increasingly leaning on fee-based and non-merchandise revenues as a profit support lever. In the third quarter, Target reported nearly 18% growth in non-merchandise sales, with membership, Roundel advertising and marketplace revenues all rising at double-digit rates. TGT highlighted that these higher-margin income streams helped offset softer discretionary demand. For Target, expanding membership-related income remains an important buffer to merchandise mix pressure.
Costco Wholesale Corporation COST continues to demonstrate the earnings power of its membership model. In the first quarter of fiscal 2026, Costco reported membership fee income of $1.329 billion, up 14% year over year. COST ended the quarter with 81.4 million paid members and 39.7 million paid Executive memberships, both showing solid growth. For Costco, recurring membership fees remain a central driver of profitability.
The Zacks Consensus Estimate for Walmart’s current fiscal year sales and earnings per share implies year-over-year growth of 4.6% and 4.8%, respectively.
What Key Metrics Say About Walmart
Walmart has seen its shares rally 23.9% in the past year compared with the industry’s growth of 23.5%.
Image Source: Zacks Investment Research
From a valuation standpoint, Walmart's forward 12-month price-to-earnings ratio stands at 38.45, higher than the industry’s 35.09.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Walmart’s current fiscal year sales and earnings per share implies year-over-year growth of 4.6% and 4.8%, respectively.
Walmart currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Walmart's Membership Fees Jump 17%: Can They Boost Profits?

Costco Wholesale Corporation COST continues to demonstrate exceptional member engagement, as evidenced by its first-quarter fiscal 2026 results. Comparable traffic, or shopping frequency, rose 3.1% worldwide during the quarter, with the average transaction, or ticket, up 3.2%. This consistent growth in warehouse visits underscores Costco’s value proposition and member engagement. In the United States, traffic increased 2.6%, while Canada and Other International locations registered shopping frequency of 5% and 3.1%, respectively.
This high level of engagement reflects several operational initiatives. The implementation of scanning memberships at warehouse entries and pre-scanning of small to medium-sized baskets has improved the member experience by increasing checkout productivity by up to 20% in some locations. The Costco Digital Wallet is another step in this direction. Costco is leveraging technology to remove friction and make shopping trips more convenient for its 145.9 million cardholders.
Member engagement is also being bolstered by digital enhancements that led to a 24% increase in e-commerce site traffic and a more than 40% jump in app traffic. Tools, such as AI-driven pharmacy inventory management and personalized website recommendations, are further strengthening the member bond. We note that digitally enabled comparable sales climbed 20.5%, supporting the view that digital engagement complements warehouse traffic.
With paid memberships growing 5.2% to 81.4 million and executive memberships increasing 9.1% to 39.7 million in the quarter, the upward trajectory of traffic confirms that the membership model remains highly effective despite a minor 10-basis-point sequential dip in the worldwide renewal rate of 89.7% due to a growing mix of digital sign-ups.
Trends at Walmart & BJ’s Wholesale
Walmart Inc. WMT U.S. reported comparable sales, excluding fuel, growth of 4.5%, supported by transaction growth of 1.8% and an average ticket increase of 2.7% in the third quarter of fiscal 2026. This mix suggests that Walmart is benefiting from both higher visit frequency and modestly higher spend per trip. At Sam’s Club U.S., Walmart reported comparable sales, excluding fuel, growth of 3.8%, driven by transaction growth of 3.9%, while the average ticket declined slightly by 0.1%.
BJ’s Wholesale Club Holding, Inc. BJ continues to show encouraging traffic momentum, reinforcing the broader strength of the warehouse club model. In the third quarter of fiscal 2025, BJ’s Wholesale delivered its 15th consecutive quarter of traffic growth and 12th straight quarter of market share gains, underscoring consistent member engagement. BJ’s Wholesale also noted that digitally enabled comparable sales grew 30% year over year, suggesting that omnichannel convenience is reinforcing in-club traffic rather than cannibalizing it.
What the Latest Metrics Say About Costco
Costco stock has declined 5.3% over the past year against the industry’s growth of 6.4%.
Image Source: Zacks Investment Research
From a valuation standpoint, Costco's forward 12-month price-to-earnings ratio stands at 41.95, higher than the industry’s ratio of 29.91. COST carries a Value Score of D.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Costco’s current financial-year sales and earnings per share implies year-over-year growth of 7.5% and 11.7%, respectively.
Image Source: Zacks Investment Research
Costco currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Costco's Traffic Growth Signals Strong Member Engagement Trends

Key Points
Memberships remain Costco’s core profit engine.
Steady sales growth matters more than flashy growth.
Expansion and digital investments are extending the runway.
Costco Wholesale (NASDAQ: COST) ended 2025 in a familiar position: operationally strong, strategically disciplined, and still trading at a premium that divides investors. While the stock didn't outperform the broader market this year, the underlying business continued to execute in ways that reinforce why Costco remains one of the most closely watched names in retail.
As investors look ahead, three themes from 2025 stand out. Together, they explain both why Costco continues to command confidence and why expectations remain high.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now, when you join Stock Advisor. See the stocks »
1. The membership engine is still doing the heavy lifting
If there was one constant in Costco's 2025 (fiscal year ended Aug. 31, 2025) performance, it was the strength of its membership model. Membership fee revenue increased to approximately $5.3 billion for the year, growing at a double-digit rate. That growth was a result of a combination of higher-paid memberships and the membership fee increase implemented in late 2024.
Paid memberships climbed to roughly 81 million households, while total cardholders reached around 145 million. Renewal rates remained near 90% globally, and even higher in the U.S. and Canada. That level of stickiness is rare in retail and continues to give Costco a structural advantage.
For investors, this matters because membership fees account for a disproportionate share of Costco's profits. The retail side of the business operates on thin margins by design. Membership income, by contrast, is high-margin, recurring, and predictable.
In 2025, that engine proved resilient even as consumers faced inflation, higher interest rates, and more selective spending. Costco didn't need to chase demand with promotions. Members continued to show up and renew their memberships. That reinforces the idea that Costco behaves less like a cyclical retailer and more like a subscription-driven business.
2. Sales growth remained steady
Costco's top-line growth in 2025 was solid rather than spectacular, but that's precisely the point. Net sales rose about 8% for the year, while comparable sales in the fourth quarter increased 5.7%, driven by both traffic growth and higher average ticket sizes.
In a year when many retailers struggled to grow volumes, Costco's ability to post positive traffic was notable. Consumers not only spent more per visit, but they also continued to return. That signals the value proposition remains intact, even as household budgets tightened.
Importantly, Costco entered fiscal 2026 with momentum. In the first quarter of the new fiscal year, revenue increased by just over 8% year over year, indicating that demand remained strong throughout the holiday period. E-commerce and digitally enabled sales continued to grow faster than in-warehouse sales, adding another layer of support.
For investors, steady sales growth matters because it compounds quietly over time. Costco doesn't need breakneck expansion to justify its long-term story. Mid-single-digit comps, combined with new warehouse openings and membership growth, are sufficient to deliver durable earnings power, provided execution remains disciplined.
3. Expansion and digital initiatives are broadening the runway
Costco continued to expand its footprint in 2025, opening 27 new warehouses (including three relocations) and pushing its global store count past 900 locations. While the U.S. remains the core market, international expansion, particularly in Asia, remains a key driver of growth.
At the same time, Costco made incremental improvements to the member experience. Digitally enabled sales grew at a double-digit pace, driven by improved online inventory access, enhanced delivery options, and streamlined checkout efficiency. Costco isn't trying to outcompete Amazon. Instead, it utilizes digital tools to improve membership value and convenience.
These moves matter because they support long-term growth without undermining Costco's cost discipline. New warehouses add members. Digital tools deepen engagement while ancillary services increase spending per household. None of these changes the core model -- it extends it.
What does it mean for investors?
Costco's 2025 didn't hinge on a single headline moment. Instead, it reinforced the same qualities investors have come to rely on: a powerful membership engine, steady sales growth, and disciplined expansion that extends the company's runway.
The stock still isn't cheap, and expectations remain high. But heading into the new year, the fundamentals suggest Costco is doing precisely what long-term investors want it to do: compound quietly, execute consistently, and avoid unnecessary risk.
For investors willing to look past short-term stock performance, 2025 offered a clear reminder of why Costco continues to earn its place among the market's most durable compounders.
Should you buy stock in Costco Wholesale right now?
Before you buy stock in Costco Wholesale, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Costco Wholesale wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $509,470!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,167,988!*
Now, it’s worth noting Stock Advisor’s total average return is 991% — a market-crushing outperformance compared to 196% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of December 29, 2025.
Lawrence Nga has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Costco Wholesale. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Costco's 2025: 3 Things Investors Should Know Heading Into the New Year

Economic Data Catch-Up

For Immediate Release
Chicago, IL – December 29, 2025 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Target Corp. TGT and Costco Wholesale Corp. COST.
Here are highlights from Friday’s Analyst Blog:
Target vs Costco: Which Discount Retailer Offers More Upside Now?
Target Corp. and Costco Wholesale Corp. are two of the most prominent names in the U.S. discount retail space, serving value-conscious consumers. Target, with a market capitalization of around $45 billion, is a leading general merchandise retailer known for its strong private-label portfolio, omnichannel capabilities and broad product mix spanning essentials, apparel, home goods and electronics. The company operates nearly 2,000 stores across the United States, supported by a robust digital ecosystem.
Conversely, Costco, with a market capitalization of about $380 billion, operates more than 923 membership warehouses worldwide, including a significant footprint in the United States. Costco has built a highly resilient retail model anchored by recurring membership fees, rapid inventory turnover and a curated assortment that drives strong customer loyalty. Its value proposition remains compelling in an inflation-sensitive environment, supported by consistent traffic trends, pricing power and growing penetration in categories like fresh food, pharmacy and fuel.
Both retailers are navigating a dynamic consumer landscape shaped by shifting spending priorities, moderating inflation and heightened competition. While Target is working to reaccelerate discretionary demand and improve margins through inventory discipline and operating efficiencies, Costco continues to benefit from steady membership growth and a value-centric model that performs well across economic cycles. For investors, the key question remains: which discount retail stock offers more upside now?
The Case for TGT
After a period of margin pressure, driven by excess inventory, higher shrink and weaker discretionary demand, Target has made visible progress. Management’s efforts in cleaning up inventory and improving operating discipline are starting to show in cleaner execution.
Target is leveraging its strong brand presence and diverse product portfolio, along with expanding e-commerce capabilities and a growing store footprint, to solidify its market position. Digital comparable sales increased 2.4% in the third quarter of fiscal 2025, driven by strong adoption of same-day services. Same-day delivery through Target Circle 360 rose more than 35%.
The company’s digital ecosystem continues to scale profitably. Target Plus delivered nearly 50% growth in gross merchandise value, reflecting expanding third-party assortment and improved marketplace engagement. At the same time, Roundel posted mid-teens revenue growth, highlighting the strength of Target’s retail media platform and its ability to monetize traffic and data more effectively. Together, these platforms are enhancing margin resilience and diversifying revenue streams beyond traditional merchandise sales.
Technology-led innovation remains a key differentiator for Target. The company is extending its leadership in AI-enabled retail through a first-of-its-kind conversational shopping experience integrated with ChatGPT. This capability allows guests to browse curated assortments, complete multi-item purchases, shop fresh food and select Drive Up, Pickup or shipping options in a single, seamless journey. Personalized recommendations enhance engagement, supporting Target’s strategy to blend convenience, discovery and value across touchpoints.
Operational execution is improving as advanced analytics enhance demand forecasting, assortment planning, and speed to market. Tools like Target Trend Brain and synthetic audiences help identify trends early and test consumer response before launch. On-shelf availability for key items improved more than 150 basis points year over year, reflecting stronger inventory forecasting and in-stock execution. Target plans to increase capital expenditure 25% to $5 billion in fiscal 2026 to support store remodels, larger-format locations, expanded fulfillment and major floor-pad upgrades.
Despite the positives, Target continues to face meaningful near-term headwinds, as cautious consumers continue to prioritize essentials over discretionary purchases. Even though the company’s recent quarterly performance aligned with management’s expectations, results remained pressured by weaker traffic trends and softer in-store momentum.
Discretionary categories such as Home and Apparel continue to lag. This softness has weighed on merchandise performance and, in turn, limited earnings momentum, prompting management to adopt a more conservative outlook for the near term. TGT narrowed its full-year adjusted EPS outlook to $7.00-$8.00 compared with the prior mentioned $7.00-$9.00.
The Case for COST
Costco’s competitive strength lies in its membership-based model, which supports steady and highly predictable earnings. Membership fees generate a reliable, high-margin revenue stream, while consistently strong renewal rates reflect deep customer loyalty. Backed by bulk purchasing power and an efficient supply chain, Costco can maintain attractive pricing for shoppers. Additionally, Costco’s private brand Kirkland Signature remains a major competitive advantage, strengthening customer stickiness while supporting margin structure.
The company has also been strategic in adapting to shifting consumer preferences. Its merchandising approach balances essential everyday products with a curated selection of unique, high-demand items, driving both foot traffic and additional spending. By relying on data-driven insights, Costco has been able to expand selectively in domestic and international markets without adding operational complexity.
Digital growth stood out in the first quarter of fiscal 2026, with digitally enabled comparable sales increasing more than 20%, supported by stronger website traffic and app engagement. Management noted that digital initiatives are helping the company better monetize its product mix, particularly in non-food and big-ticket categories, while still enhancing and not replacing the in-store shopping experience.
Operational efficiency remains another key advantage. Costco reported meaningful productivity gains from pre-scan technology, which improved checkout speed in warehouses. AI-driven pharmacy inventory systems helped lift in-stock levels and supported solid growth in prescription volumes. Same-day delivery offerings, enabled through partnerships with third-party platforms in the U.S. and international markets, also performed well in the quarter, extending convenience with limited capital intensity.
That said, Costco continues to operate with thin merchandise margins. Wage inflation, logistics expenses and ongoing technology investments could pressure margins in the near term. In addition, the demand for discretionary items may fluctuate with consumer spending trends. While Costco’s model remains highly durable, maintaining execution discipline and cost control will be key to sustaining the long-term performance.
How Does the Zacks Consensus Estimate Compare for TGT & COST?
The Zacks Consensus Estimate for Target’s current fiscal-year sales and EPS implies year-over-year declines of 1.6% and 17.7%, respectively. The consensus estimate for EPS for the current fiscal year has declined 13 cents to $7.29 over the past 60 days.
The Zacks Consensus Estimate for Costco’s current fiscal-year sales and EPS suggests year-over-year increases of 7.5% and 11.7%, respectively. The consensus estimate for EPS for the current fiscal year has moved upward by 12 cents to $20.09 over the past 60 days.
Stock Performances of TGT & COST
Over the past year, shares of Target have slumped 28.8%, whereas Costco has declined 7.1%.
Dive Into Stock Valuations of TGT & COST
Target is trading at a forward price-to-sales (P/S) multiple of 0.41, below its median of 0.57 in the last three years. Costco’s forward 12-month P/S multiple sits at 1.28, below its median of 1.33 in the last three years.
TGT or COST: Which Is the Better Bet Now?
Costco stands out as the stronger investment candidate, supported by its membership-based business model, high customer loyalty and consistent operational efficiency. Recurring membership fees provide a reliable, high-margin income stream, while strong renewal rates demonstrate the company’s value proposition. Selective domestic and international expansion, data-driven merchandising, and digital initiatives drive traffic and sales without undermining in-store performance, reinforcing Costco’s competitive position.
While Target is making progress with digital initiatives, AI-driven operations and merchandising innovation, it faces soft traffic, underperforming higher-margin categories and promotional pressures. In contrast, Costco’s defensive positioning makes it the better option to hold, offering a clearer path to stable, long-term growth.
Both Target and Costco currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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The Zacks Analyst Blog Highlights Target and Costco Wholesale

Key Points
Costco doesn’t try to maximize revenue from merchandise sales, instead leaning on its membership model.
The company’s massive sales base, coupled with a limited SKU count, gives it a tremendous cost advantage.
The stock still trades at an expensive valuation, but the market might never offer Costco at a bargain.
Costco (NASDAQ: COST) is a massive business. In fiscal 2025 (ended Aug. 31), it registered $270 billion in net sales. This huge sum makes it the world's third-biggest retailer, behind only Walmart and Amazon.
Costco shares have historically performed very well. Over the past decade, for example, they're up 429% (as of Dec. 23), providing a nice boost to investor portfolios. The retail stock is down 7% in 2025, though.
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Before you hit the buy button, here are three must-know facts about Costco.
1. Costco's memberships are its money maker
Through its 921 warehouse clubs, Costco sells merchandise ranging from groceries and apparel to electronics and home goods. But making lots of money on merchandise sales isn't Costco's key focus. The gross margin was just 11.3% in Q1 2026 (ended Nov. 23), which reveals that management implements low mark-ups on its inventory. Retail peers typically have much higher mark-ups on their goods.
Instead, Costco runs a thriving membership model. Consumers must pay an annual fee to enter a warehouse and shop for items. Costco's membership count grew 5.2% year over year to 81.4 million in the last quarter, helping increase membership income to $1.3 billion. The worldwide renewal rate usually hovers around 90%, showcasing strong loyalty.
Memberships introduce a high-margin and recurring revenue stream. And they have proven pricing power. They also drive customers to visit stores more frequently, so they feel that the annual fee is worth it. This might explain why Costco has a stellar track record of posting same-store sales growth.
2. Having a massive scale helps tremendously
Great businesses are those that have economic moats, a term popularized by Warren Buffett. Costco excels in this area. Its moat is supported by a powerful cost advantage. Credit directly goes to the company's incredible scale, as demonstrated by the previously mentioned fiscal 2025 net sales of $270 billion.
The average Costco club has about 4,000 stock-keeping units (SKUs). This is a significantly smaller number than the 30,000 SKUs a normal supermarket might carry. As a result of a narrow product focus, Costco buys large quantities of a limited number of goods. This gives it immense buying powerful and negotiating leverage over its supplier base, leading to low costs and everyday savings for shoppers. This cost advantage only improves over time, as greater sales support more supplier leverage that leads to ongoing savings. It's a positive feedback loop.
3. Even after a stock dip, the shares are expensive
Since hitting a peak in February 2025, shares have fallen 21%. That drop has occurred despite Costco putting up solid financial results that don't indicate at all that it's losing its competitive edge. Investors might be interested in buying the dip.
The valuation still doesn't look like a bargain, though. Investors can purchase the stock if they are willing to pay a price-to-earnings (P/E) ratio of 45.7. This is an 81% premium to the S&P 500 index. Value investors might not be comfortable with this setup, as it evidently provides no margin of safety.
There's an optimistic view that investors can adopt as well. Perhaps the market will always give Costco a higher valuation because it's a durable, predictable, and stable business. This seems to have always been the case, as the financials are robust. Net income soared 241% between fiscal 2015 and fiscal 2025. Costco continues to open about 25 new stores each year, too.
It's impossible to accurately assess market sentiment to figure out what the right valuation should be. But I believe there is some merit to the argument that Costco shares will never trade at an optically cheap P/E multiple.
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Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Costco Wholesale, and Walmart. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Costco Wholesale Corporation

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