Key Points
Costco reported strong comps growth and profits over the past year.
The market is worried about how well the retailer will perform with high inflation hitting consumers.
Costco stock trades at an expensive valuation.
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Costco Wholesale (NASDAQ: COST) stock has a history of soundly beating the market, but it's been trading roughly flat over the past year, while the S&P 500 is up 31%. The business has been delivering fantastic results, so what's going on?
Let's check out this warehouse club retail giant and see if it's time to sell Costco stock.
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A year of fabulous growth
Here's how Costco has been doing over the past year:
| Metric | Q3 2025 | Q4 2026 | Q1 2026 | Q2 2026 |
|---|---|---|---|---|
| Revenue growth (YOY) | 9% | 8% | 8.2% | 9.1% |
| Comps growth (YOY) | 5.7% | 5.7% | 6.4% | 7.4% |
| E-commerce growth (YOY) | 14.8% | 13.6% | 20.5% | 22.6% |
| EPS growth (YOY) | 13% | 11% | 11% | 14% |
Data source: Costco quarterly reports. YOY = Year over year. Costco's fiscal year ends Aug. 31.
The "softer" metrics have been excellent as well, with a 13.6% year-over-year increase in membership income in the fiscal second quarter (ended Feb. 15) and a 92.1% U.S. and Canada renewal rate.
Worldwide renewal rates have been a bit lower, 89.7% in the quarter, which management attributes to more online signups. That's a new service, and the benefits likely outweigh the drawbacks, since it attracts a younger cohort.
Image source: Getty Images.
E-commerce, or what Costco now calls digitally enabled sales, has been an especially strong growth driver. Costco has been doing e-commerce its own way, partnering with third-party delivery services like Instacart for grocery delivery and offering curbside pickup for large, bulky items that are expensive to ship.
Is it time to sell or buy?
These are consistently fantastic results. So what's going on?
There have been a few worries, starting with the general macroeconomic environment. Customers rely on Costco for more than cheap hot dogs and bulk toilet paper; it sells jewelry, appliances, and other expensive items, in addition to its travel business. These are the kinds of products people cut back on when there's pressure.
It's also an expensive stock, trading at 52 times trailing 12-month earnings. That's a premium price for a retail stock, and any issue, like lower global renewal rates, can negatively impact it.
Finally, I'll note that Costco stock has been recovering -- it's up 15% this year, which is beating the market again (up just 8.4%). The market seems to be noticing that its fears may be unfounded, or at least less worrisome than it may have thought.
Still, the valuation is high for a retail stock. I wouldn't sell Costco stock if I owned it today, but new investors may want to wait for a better entry point or use a dollar-cost-averaging strategy to build a position.
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Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool recommends Instacart. 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.
