Is Costco Stock a Buy on the Dip as Same-Store Sales Surge?
Is Costco Stock a Buy on the Dip as Same-Store Sales Surge?
Geoffrey Seiler, The Motley FoolMon, June 1, 2026 at 8:40 AM UTC
0
Key Points -
Costco continues to deliver strong same-store sales.
However, the stock's valuation indicates it trades at a significant premium to its peers.
10 stocks we like better than Costco Wholesale ›
Costco Wholesale (NASDAQ: COST) once again delivered outstanding results when it reported its earnings on May 28. Nonetheless, its stock fell on the news. Shares are now up 10% on the year, but down about 5% over the last 12 months.
Let's take a closer look at the retailer's results (for its fiscal third quarter, ending May 10, 2026) and prospects, to see if this dip is an opportunity to buy.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
The Costco Wholesale logo.
Image source: The Motley Fool.
Costco's same-store sales continue to shine
Costco delivered strong quarterly sales, boosted by robust e-commerce and consumers flocking to its attached gas stations to fill their vehicles' tanks. Digital revenue climbed 21.5%, with app and website traffic surging 37%. Personalized recommendations helped bolster e-commerce sales by nearly $5 billion. Meanwhile, the company saw record gasoline volumes for a single quarter.
Overall, fiscal Q3 revenue jumped 11.6% year over year to $69.15 billion, and adjusted earnings per share (EPS) increased 15% to $4.93. Same-store sales rose by 6.6% when adjusting for changes in gasoline prices and foreign currency. U.S. same-store sales increased by 6.8% (adjusted), while Canadian comparables climbed by 6.2% (adjusted). Other international same-store sales rose by 5.9% (adjusted).
Excluding gasoline and currency impacts, Costco's average transaction climbed 4.2% worldwide and 5% in the U.S., while traffic grew by 2.4% worldwide and 1.8% in the U.S. It saw high-single-digit same-store growth both in both fresh food and nonfood items.
Membership-fee revenue jumped 10.7% year over year in the quarter to $1.37 billion. Paid memberships rose by 4.1% to 82.9 million households, while higher-cost executive memberships jumped by 9.6% to 41.2 million. Costco's membership renewal rate was 92.2% in North America and 89.7% worldwide.
The warehouse club opened four new locations in the quarter, and expects to open 12 more this fiscal year for a total of 26 net new openings. It now has 928 warehouses around the globe.
Advertisement
Is it time to buy this stock on the dip?
Costco continues to demonstrate why it's one of the best retailers in the world, as it keeps delivering solid results quarter after quarter. That type of consistency, and the company's recession-resistant nature, deserve a premium.
However, how much of a premium it should command is the tricky part. The stock currently trades at a forward price-to-earnings (P/E) ratio of nearly 42 times its expected earnings for fiscal 2027 (which ends in August 2027). That's considerably more than Amazon, which trades at less than 28 times forward estimates, and has been growing its retail revenue just as quickly while showing much stronger operating leverage. It's also a premium to Walmart, which trades at 35 times forward earnings estimates.
While a solid long-term holding, Costco is not a stock I'd be picking up on the dip at this time, as its upside looks a bit capped by its high valuation.
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 $463,900!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,294,401!*
Now, it’s worth noting Stock Advisor’s total average return is 978% — a market-crushing outperformance compared to 211% 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.
See the 10 stocks »
*Stock Advisor returns as of June 1, 2026.
Geoffrey Seiler has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Costco Wholesale, and Walmart. The Motley Fool has a disclosure policy.
Source: “AOL Money”
