Costco Stock Is 13% Off Its High. Here’s What’s Behind the Pullback

Key Stats for COST Stock

• Past week’s performance: Consolidating
• 52-week range: $844 to $1,097
• Valuation model target price: $1161
• Implied upside: 21.7% over 2.1 years

See how Costco’s steady growth translates into a target price with TIKR’s Guided Valuation Model (It’s free) >>>

A Steady Grower Cooling Off From Its Highs

Costco (COST) trades near $951, about 13% below its 52-week high of roughly $1,097 set earlier this year. The stock has been range-bound in recent weeks, and the clearest recent catalyst was Costco’s June sales report, which showed net sales rising 10.6% to $29.24 billion. Shares slipped after that release because comparable sales growth decelerated from May, even though the headline growth rate remained solid by retail standards.

That deceleration follows a stronger April and May, when Costco’s fiscal third-quarter results showed net income climbing 15% to $2.19 billion and net sales rising 12% to $69.15 billion. Comparable sales in that quarter were up 9.8%, and digitally enabled comparable sales jumped over 21%, showing Costco’s e-commerce push is gaining real traction. Chief Financial Officer Gary Millerchip said the company was pleased with the quarter’s results, citing executive membership growth of over 9% as a key driver.

Membership trends remain Costco’s most closely watched metric, since renewal rates and executive member growth signal how loyal its customer base stays through periods of inflation or tariff uncertainty. Costco has also continued to face minor legal headwinds, including ongoing litigation related to tariff refund claims for prior import duties, though none of these have materially affected the stock.

If June’s slower comp growth continues into July’s sales report, due August 5, investors may start questioning whether Costco’s growth rate is settling into a lower gear.

Costco’s July sales report lands next week. Track the trend against your own forecast with TIKR (It’s free) >>>

Is COST Stock Undervalued?

Under valuation model assumptions realized through 8/31/28, the stock is modeled using:

• Revenue Growth (CAGR): 8.3%
• Operating Margins: 4.0%
• Exit P/E Multiple: 43.6x

Based on these inputs, the model estimates a target price of $1,161, implying 21.7% total upside from the current share price and a 9.8% annualized return over the next 2.1 years.

A 9.8% projected annual return sits just under the 10% mark investors typically look for, placing Costco closer to fairly valued than deeply undervalued. That’s consistent with a stock priced for stability rather than a turnaround, since its forward P/E multiple assumption of nearly 44x reflects a premium most retailers don’t command.

Costco earns that premium through consistency, since its revenue growth has stayed in a tight band for years and its membership model generates recurring, high-margin fee income that cushions thinner retail margins elsewhere in the business.

Compared with Walmart, Costco trades at a noticeably higher forward P/E, since Walmart’s larger scale and lower membership dependence make it the cheaper, more diversified option. BJ’s Wholesale, Costco’s closest warehouse club peer, trades at a lower multiple still, reflecting its smaller footprint and slower international expansion. Costco’s premium exists because investors reward its unusually sticky membership base and its track record of low single-digit operating margins that still translate into strong free cash flow.

If comparable sales growth stabilizes rather than continuing to decelerate, Costco’s valuation gap to Walmart could persist rather than close, since the market has consistently paid up for Costco’s predictability.

Compare Costco’s valuation to Walmart and BJ’s side by side (Free with TIKR) >>>

Costco vs. Walmart and BJ’s Wholesale

Walmart (WMT) remains Costco’s largest and most direct competitor, even though its business model differs meaningfully. The company doesn’t rely on membership fees the way Costco does, and its revenue base is roughly five times larger, but its operating margins run in a similar low single-digit range once grocery and general merchandise are blended together. Walmart trades at a lower forward P/E than Costco’s valuation model assumes, largely because investors see less room for multiple expansion in a business already at massive scale.

BJ’s Wholesale (BJ) offers the closest apples-to-apples comparison, since it runs the same membership warehouse model. BJ’s has posted comparable sales growth in the mid single digits recently, slower than Costco’s, and trades at a meaningfully lower forward P/E as a result. That gap illustrates how much of Costco’s premium comes from its brand strength and international growth runway, both of which BJ’s lacks at its smaller, US-only scale.

See how record sales and membership fees underpin Costco’s 2-year EPS path >>>

What’s Driving COST Stock Going Forward?

The most immediate catalyst is Costco’s July sales report, due August 5, which will show whether June’s deceleration was a one-month blip or the start of a slower growth trend. Investors will focus closely on comparable sales excluding gas and foreign exchange effects, since that figure strips out volatility and shows the core business trend more clearly.

Membership renewal rates and executive member growth remain the structural driver behind Costco’s long-term thesis. Executive members, who pay a higher annual fee and shop more frequently, grew over 9% last quarter, and continued strength there would support the recurring, high-margin fee income that underpins Costco’s valuation premium. Costco’s ongoing digital and e-commerce expansion, where digitally enabled sales grew over 21% last quarter, is another factor that could support margins if it keeps scaling.

Costco’s Q4 earnings call, expected in September, will be the next major checkpoint for investors watching whether growth reaccelerates. Until then, tariff-related litigation and any commentary on pricing strategy will likely stay in the background rather than drive the stock.

See Costco’s next earnings date and how the model updates in real time (Free with TIKR) >>>

Should You Invest in Costco Wholesale Corporation?

The only way to really know is to look at the numbers yourself. TIKR gives you free access to the same institutional-quality financial data that professional analysts use to answer exactly that question.

Pull up COST, and you’ll see years of historical financials, what Wall Street analysts expect for revenue and earnings in the quarters ahead, how valuation multiples have moved over time, and whether price targets are trending up or down.

You can build a free watchlist to track COST alongside every other stock on your radar. No credit card required. Just the data you need to decide for yourself.

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Disclaimer:

Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!