Costco (COST): Reassessing Valuation After Strong September Sales and New Digital Momentum

Costco Wholesale (COST) caught the market’s attention after announcing an 8% jump in net sales for September, ending October 5, 2025. Gains came from both physical stores as well as a surge in digital sales.

See our latest analysis for Costco Wholesale.

The upbeat September sales have powered Costco’s momentum, with shares recently catching a 2% boost after the numbers dropped. While the stock has drifted slightly lower in the past month, its year-to-date share price return of nearly 3% and a robust five-year total shareholder return of 170% show Costco’s long-term rewards remain meaningful for patient investors. Ongoing digital gains and store growth keep sentiment strong, even as some peers attract attention with new strategies.

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But with Costco’s shares climbing on strong results and digital momentum, the next question is critical. After years of outperformance, does the stock still have room to run, or is future growth already fully priced in?

Most Popular Narrative: 11.8% Undervalued

Costco’s most widely followed valuation view sets its fair value at $1,061, which is notably above the last close of $935.56. With Wall Street’s consensus raising projections for growth and profit, expectations are high. However, the key driver behind this price target deserves closer inspection.

"Margin improvements and effective navigation of rising input costs highlight the company’s execution strengths. This supports its reputation as a defensive growth holding."

Read the complete narrative.

Want to know what’s fueling this double-digit premium? This narrative is based on future sales gains, margin expansion, and a profit multiple that rivals top tech stocks. Curious about the big assumptions involved? Explore further to see the ambitious numbers driving this bold fair value.

Result: Fair Value of $1,061 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, rising labor costs and currency fluctuations could weigh on margins and present challenges to Costco’s optimistic growth outlook in the coming quarters.

Find out about the key risks to this Costco Wholesale narrative.

Another View: What Do Market Multiples Signal?

Looking beyond fair value estimates, Costco’s valuation jumps out when using its price-to-earnings ratio. Shares trade at 51.2 times earnings, far above the US Consumer Retailing industry average of 20.5 times and a peer average of 22.1 times. The fair ratio, based on market trends, is just 29.5 times. Such a gap highlights how much optimism investors are baking in, or how much risk could emerge if growth slows. Is this premium a sign of confidence, or a warning to tread carefully?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Costco Wholesale Narrative

If you see the story differently or want to dive into the numbers on your own terms, building your own view is fast and easy. It takes just a few minutes. Do it your way

A great starting point for your Costco Wholesale research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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