| Period | Revenue $B | Rev growth | EPS $ | EPS growth | Analysts |
|---|---|---|---|---|---|
| Current qtr | 94.41 | 9.6% | 6.56 | 11.7% | 27 |
| Next qtr | 73.09 | 8.6% | 4.86 | 8% | 17 |
| FY current | 301.41 | 9.5% | 20.59 | 13% | 30 |
| FY next | 325.96 | 8.1% | 22.68 | 10.2% | 32 |
Growth is year over year vs the comparable period. MIDAS computes its own fair value below; consensus is shown for context.
Costco Wholesale trades at $916.05, down 6.9% over one month and 8.2% over three months, underperforming the S&P 500 by 9.3% and 19.2% respectively. The stock sits 7.0% below its 50-day SMA of $985.44 and 4.3% below its 200-day SMA of $956.78, with RSI at 37.6. A DCF on $10.91B owner earnings at 8.6% WACC and 25% perpetual growth yields fair value of $1,034.83, implying 13% upside, but reducing growth to 20% drops fair value to $855, below current price. FY2026 consensus calls for $301.41B revenue and $20.59 EPS, representing 9.5% and 13.0% growth respectively. Monte Carlo simulation assigns 66.1% probability of 12-month loss. Scenario-blend expected value is $936.01, just 2.2% above spot. Next earnings report September 24. Insider activity shows 11 open-market sales, zero buys, net negative $11.98M. The desk rates the name Hold pending the Q3 print and rate clarity.
Costco's membership model resilience and 13% DCF upside create outperformance as Q3 earnings and rate clarity become catalysts.
Costco has pulled back 6.9% in one month and 8.2% over three months, underperforming the broader SPX by 9.3% and 19.2% respectively on valuation repricing amid higher rates. Yet the operational backdrop remains compelling: FY2026 revenue guidance implies 9.5% growth to $301.4B, with earnings per share accelerating 13.0% to $20.59. The membership model—core to COST's 29.2% return on equity and 21.5% trailing revenue growth—generates durable pricing power and high-margin incremental subscribers. The stock now trades at $916 versus a DCF fair value of $1,035 (8.6% WACC, 25% perpetual FCF growth), implying 13% upside. Analyst consensus targets $1,080 (+18%), supported by 33 sell-side calls and a 'buy' rating. Seasonality (Q4 holiday membership renewals) and Q3 earnings (Sept 24) will test the membership thesis; the rate environment (Fed funds 3.63%, 10Y at 4.54%, prediction markets pricing 62.5% no-change at July meeting) leaves room for multiple expansion if inflation remains contained. While insider selling nets −$12M and the Monte Carlo 12m tail shows downside risk (66.1% loss probability), the defensive beta (0.872) and 3.7% operating margin provide portfolio cushion.
COST trades $916 versus DCF fair value of $1,035 (base: 8.6% WACC, 25% perpetual growth on $10.91B owner earnings), implying 13% upside. Bear case $727 reflects 20% terminal growth / 9.6% WACC; bull case $1,255 assumes 25% growth / 7.6% WACC. Analyst consensus ($1,080, 33 calls) anchors the bull thesis; 40.8x PE forward is elevated but justified by 13.0% EPS growth and 29.2% ROE. Scenario blending (25% bear $692, 50% base $940, 25% bull $1,171) yields expected value $936 (+2.2%). Monte Carlo 12m shows 66.1% loss probability, flagging tail risk.
The sell-side thesis rests on a 25% perpetual FCF growth rate applied to a $409B market-cap retailer — a heroic assumption that does all the valuation work. At 20% growth the DCF yields $855, making COST overvalued today. The scenario blend confirms this fragility: expected value $936 is just 2.2% above $916, offering negligible compensation for 66.1% Monte Carlo loss probability and a P10 outcome of $658. Insiders agree — 11 sells, zero buys, net -$11.98M. The stock trades below both key moving averages with an RSI of 37.6, and the relative underperformance versus SPX (-26.6% over one year) suggests rotation out of defensive staples, not temporary mispricing. A 36.4% chance of a rate hike further threatens the multiple. Wait for the Q3 print before re-engaging.
Variant perception. The sell-side frames the 6.9% one-month pullback as a buying opportunity, but the tape disagrees: COST underperforms SPX by 26.6% over one year, RSI sits at 37.6, and price trades below both the 50-day ($985.44) and 200-day ($956.78) SMAs. The DCF's 25% perpetual growth assumption is doing all the heavy lifting — shave it to 20% at the same 8.6% WACC and fair value drops to $855, below current price. Meanwhile, the scenario-blend expected value of $936 offers only 2.2% upside, and Monte Carlo shows 66.1% probability of loss over 12 months. The sell-side is buying a membership narrative at a multiple that demands perfection.
For the current price to be right, you must believe:Five-year DCF from a base owner earnings (capex 2.27x D&A) of $10.91B, growth 25 percent (historical, capped), WACC 8.6 percent, terminal growth 2.5 percent: fair value $1,034.83 per share (13% vs current).
| FCF growth \ WACC | 7.6% | 8.6% | 9.6% |
|---|---|---|---|
| 20% | $1,035.33 | $855.42 | $726.76 |
| 25% | $1,255.19 | $1,034.83 | $877.32 |
| 25% | $1,255.19 | $1,034.83 | $877.32 |
| Ratios and valuation | |
|---|---|
| P/E (trailing) | 46.41x |
| P/E (forward) | 40.76x |
| EV/EBITDA | 29.35x |
| EV/Sales | 1.38x |
| FCF yield | 1.7% |
| Dividend yield | 0.64% |
| Growth and margins | |
|---|---|
| Revenue growth | 21.5% |
| EPS growth | 45.5% |
| Gross margin | 12.9% |
| Operating margin | 3.7% |
| Net margin | 3% |
| ROE | 29.2% |
| Balance sheet and risk | |
|---|---|
| Net debt $B | -0.9 |
| Beta | 0.87 |
| Ann. volatility | 19.7% |
| Max drawdown | -21% |
| Short interest | n/a |
| Shares out $B | 0.44 |
| Scenario | Probability | Value | Vs price |
|---|---|---|---|
| Bear | 25% | $692.23 | -24.43% |
| Base | 50% | $940.37 | 2.65% |
| Bull | 25% | $1,171.05 | 27.84% |
| Expected value | $936.01 | 2.2% |
Method: multi-method median (dcf, monte_carlo) · Monte Carlo p10/p50/p90 (12m, 10,000 paths): $657.69 / $845.9 / $1,086.9 · 1-day parametric VaR on $100k: 95% $2,041, 99% $2,887
| Risk | Severity |
|---|---|
| Rate-driven multiple compression: 36.4% probability of a July rate hike per prediction markets; 10Y at 4.54% directly pressures the 40.8x forward PE and the DCF's 8.6% WACC assumption | high |
| DCF growth sensitivity: reducing perpetual growth from 25% to 20% at 8.6% WACC collapses fair value from $1,035 to $855 — below current $916 price | high |
| Persistent insider selling: 11 open-market sales, zero buys, net -$11.98M — management is not buying the undervaluation thesis | med |
| Negative technical momentum: price $916 vs 50-day SMA $985.44 and 200-day SMA $956.78; RSI 37.6; max drawdown -21.0% from 52-week high of $1,095.06 | med |
| Margin fragility: 3.7% operating margin leaves near-zero buffer for cost inflation, wage pressure, or membership fee elasticity surprises | med |
| Monte Carlo tail risk: P10 outcome is $657.69 (28.2% downside); 66.1% probability of 12-month loss overwhelms the 13% DCF upside claim | low |
Revenue for the quarter ending May 2026 came in at $70.53B with net income of $2.19B, following $69.6B and $2.04B in the February quarter and $67.31B and $2.0B in November. The August 2025 quarter, which captures holiday seasonality, posted $86.16B revenue and $2.61B net income. The sequential trajectory shows steady top-line expansion. Street consensus for the current quarter expects $94.41B revenue and $6.56 EPS, implying 9.6% and 11.7% growth respectively.
| Quarter | Revenue $B | Net income $B |
|---|---|---|
| 2026-05-31 | 70.53 | 2.19 |
| 2026-02-28 | 69.6 | 2.04 |
| 2025-11-30 | 67.31 | 2 |
| 2025-08-31 | 86.16 | 2.61 |
| 2025-05-31 | 63.2 | 1.9 |
Price at $916.05 sits 7.0% below the 50-day SMA of $985.44 and 4.3% below the 200-day SMA of $956.78. RSI reads 37.6, approaching oversold territory. The 52-week range spans $849.75 to $1,095.06, placing the stock in the lower third. Annualized volatility is 19.7% with ATR at 1.83% of price. Maximum drawdown from peak stands at 21.0%. Relative performance versus the S&P 500 is negative 26.6% over one year. Weekly closes show a grind lower from the $1,030 area through the current $916 level.
| 1m | 3m | 6m | 12m | |
|---|---|---|---|---|
| Absolute | -6.9% | -8.2% | 0.1% | -5.6% |
| Rel. to S&P 500 | -9.3% | -19.2% | -9.4% | -26.6% |
| Trend | Ann. vol | Max DD | RSI(14) | SMA50 | SMA200 |
|---|---|---|---|---|---|
| mixed | 19.7% | -21% | 37.6 | $985.44 | $956.78 |
Fed funds at 3.63% and the 10-year Treasury at 4.54% keep discount rates elevated for long-duration consumer staples names. Prediction markets price a 62.5% probability of no rate change at the July FOMC and a 36.4% probability of a 25 basis point hike. The VIX at 15.03 and unemployment at 4.2% suggest a stable but rate-sensitive backdrop. A hike would pressure the 40.8x forward multiple directly.
Fed funds 3.63 · UST 10y 4.54 · 10y-2y 0.35 · Core PCE 130.08 · 10y BE 2.24 · U-3 4.2 · VIX 15.03 (FRED)
Prediction markets (Polymarket): Will there be no change in Fed interest rates after the July: 62.5% · Will the Fed decrease interest rates by 25 bps after the Jul: 0.4% · Will the Fed increase interest rates by 25 bps after the Jul: 36.4% · Will the Fed decrease interest rates by 50+ bps after the Ju: 0.1%
Open-market: 0 buys, 11 sells, net $-11,982,666. Director sold $847,345 on 2026-06-23; Executive Vice President sold $695,100 on 2026-04-01; Executive Vice President sold $732,205 on 2026-03-09
| Block | Source |
|---|---|
| tape | alpaca |
| fundamentals | yfinance |
| news | tradingview/yahoo |
| edgar_check | sec_xbrl |
| insiders | sec_form4 |
| prediction_markets | polymarket |
| macro | fred |
SEC XBRL cross-check: FY revenue $275.24B (2025-08-31) vs trailing four quarters $293.6B: agrees.
Compliance audit: FAIL, 3 issue(s) addressed