The warehouse giant's stock is sitting near an all-time high valuation.
Costco (COST 0.68%) is one of those rare businesses that does an excellent job satisfying all its stakeholders. Shoppers love its treasure-hunting atmosphere and low prices, employees stick around for far longer than the industry average, and the chain's investors have been rewarded for patiently holding the stock. Costco shares have returned more than 15% per year for nearly 40 years, in fact, enough to create many millionaires since its 1985 initial public offering.
Investing is all about the future, though, and there are limits to Costco's growth potential from here. Shares are trading near a record high valuation, and so it's reasonable to wonder whether you'll get good returns from buying the stock right now. Despite those challenges, Costco stock should be a good addition to most investors' portfolios. Here's why.
Engagement is high
The foundation of any retailer's strength is the level of engagement it can keep with its core shoppers. With inflation soaring, this past year has tested Costco along with all of its peers on this point, and the warehouse retailing giant has aced that test. Comparable-store sales growth remained steady in 2023 and accelerated to an 8% increase in early 2024.
There's an even better metric to judge the chain, though, and that's its renewal rate. As a membership club, it's critical that Costco convince its existing membership base to continue paying its annual fees. A record 92% of subscribers are choosing to renew today, meaning shoppers believe they are getting plenty of value from the service.
Margins are steady
Costco isn't the stock for you if you prioritize high profits. In fact, the chain easily generates the lowest gross profit margin among national retailers. Earnings don't tend to spike during high growth periods, either. That's because Costco's management team takes the chain's price leadership selling approach seriously and chooses to redirect most excess cash toward reducing prices even further.
COST Net Income (TTM) data by YCharts
Still, you'll see much more stability when owning Costco's stock than you'd expect from a retailing business. That's a valuable prospect for investors who've been burned by sharp profit drops by peers such as Targetin the past.
About that stock price
As you might expect, you'll have to pay a premium to own a business that has this much going for it. Costco shares are priced at 1.3 times revenue, or about twice the valuation of peers Target and Walmart. Its premium is sitting near an all-time high currently while these competitors are far off of their record levels. That means there's a higher risk that you'll overpay for this highly successful business.
That's a risk worth taking for most investors. Of course, if you're more cautious, then you might want to watch the stock in hopes that a market downturn will bring about a cheaper starting price. Keep in mind that Costco rarely trades at a significant discount, though. There have only been a few times in the past 3 years that you could buy the retail stock for less than 1 times annual sales.
If you're seeking an industry leader with fantastic brand strength, steady earnings growth, and solid (if unpredictable) dividend income, then look no further than Costco stock. It's a great business that's trading at a decent price today.
Demitri Kalogeropoulos has positions in Costco Wholesale. The Motley Fool has positions in and recommends Costco Wholesale, Target, and Walmart. The Motley Fool has a disclosure policy.
FAQs
Costco has a consensus rating of Strong Buy which is based on 18 buy ratings, 5 hold ratings and 0 sell ratings. The average price target for Costco is $933.75. This is based on 23 Wall Streets Analysts 12-month price targets, issued in the past 3 months.
Will Costco stock reach $1000? ›
Costco is a top stock to buy and hold
It looks to be in a good position to rally in the latter half of the year and possibly hit the $1,000 mark, but even if it doesn't, it may only be just a matter of time before that happens.
Is Costco stock overvalued? ›
Compared to its peers, Costco's price-earnings ratio is significantly higher at 3 times the industry median. The PEG ratio, which incorporates expected growth, is not any better, and is also 3 times the industry median.
What is the target price for Costco? ›
Stock Price Targets
| High | $1,050.00 |
|---|
| Median | $920.00 |
| Low | $676.00 |
| Average | $894.86 |
| Current Price | $915.03 |
Costco - 38 Year Stock Price History | COST
- The all-time high Costco stock closing price was 908.90 on August 27, 2024.
- The Costco 52-week high stock price is 918.93, which is 2.8% above the current share price.
- The Costco 52-week low stock price is.
- The average Costco stock price for the last 52 weeks is 722.28.
KIRK Stock 12 Month Forecast
Based on 2 Wall Street analysts offering 12 month price targets for Kirkland's in the last 3 months. The average price target is $7.00 with a high forecast of $7.00 and a low forecast of $7.00. The average price target represents a 354.55% change from the last price of $1.54.
What is the 12 month forecast for Costco stock? ›
Costco Stock Forecast
The 27 analysts with 12-month price forecasts for Costco stock have an average target of 823.96, with a low estimate of 585 and a high estimate of 975. The average target predicts a decrease of -8.49% from the current stock price of 900.40.
What will Costco stock be worth in 2025? ›
According to analysts, COST price target is 890.39 USD with a max estimate of 1,050.00 USD and a min estimate of 676.00 USD. Check if this forecast comes true in a year, meanwhile watch Costco Wholesale stock price chart and keep track of the current situation with COST news and stock market news.
Could Costco stock split? ›
Key Points. Costco is about to hit $1,000 a share, meaning it is poised to split its stock. The business is thriving but trades at an expensive valuation. Investors should ignore a potential stock split and focus on the business fundamentals.
Why is Costco stock crashing? ›
Shares of membership-only discount retailer Costco (NASDAQ:COST) fell 7.7% in the afternoon session after the company reported fourth-quarter results with revenue falling short of analysts' expectations. Free cash flow also underwhelmed during the quarter with the company recording a significant amount of cash burn.
The ownership structure of Costco (COST) stock is a mix of institutional, retail and individual investors. Approximately 54.24% of the company's stock is owned by Institutional Investors, 0.82% is owned by Insiders and 44.94% is owned by Public Companies and Individual Investors.
What are good stocks to buy today? ›
Stocks
| Symbol | Price | Change |
|---|
| TSLA Tesla, Inc. | 229.81 +1.68 (+0.74%) | +1.68 |
| WBD Warner Bros. Discovery, Inc. | 7.66 +0.72 (+10.37%) | +0.72 |
| PLTR Palantir Technologies Inc. | 34.91 +0.06 (+0.17%) | +0.06 |
| INTC Intel Corporation | 19.36 -0.28 (-1.43%) | -0.28 |
21 more rowsCostco currently has an average brokerage recommendation (ABR) of 1.64 on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell etc.) made by 32 brokerage firms. The current ABR compares to an ABR of 1.60 a month ago based on 31 recommendations.
What is the future projection for Costco? ›
Costco Wholesale is forecast to grow earnings and revenue by 7.2% and 6.1% per annum respectively. EPS is expected to grow by 9.1% per annum. Return on equity is forecast to be 24.6% in 3 years.
What is the fair value of Costco? ›
As of 2024-09-10, the Fair Value of Costco Wholesale Corp (COST) is 244.7 USD. This value is based on the Peter Lynch's Fair Value formula. With the current market price of 894.29 USD, the upside of Costco Wholesale Corp is -72.6%.
What is the stock price forecast for Costco in 2025? ›
According to analysts, COST price target is 894.86 USD with a max estimate of 1,050.00 USD and a min estimate of 676.00 USD.
Is CRWd a buy? ›
Is CRWD a Buy, Sell or Hold? CrowdStrike Holdings has a consensus rating of Strong Buy which is based on 34 buy ratings, 5 hold ratings and 1 sell ratings.
What is the rate of return for Costco stock? ›
The total return for Costco Wholesale (COST) stock is 65.13% over the past 12 months. So far it's up 36.43% this year. The 5-year total return is 235.30%, meaning $100 invested in COST stock 5 years ago would be worth $335.30 today. Total return includes price appreciation plus reinvesting any dividends paid out.
Who has the most stock in Costco? ›
What percentage of Costco (COST) stock is held by retail investors? According to the latest TipRanks data, approximately 44.94% of Costco (COST) stock is held by retail investors. Who owns the most shares of Costco (COST)? Vanguard owns the most shares of Costco (COST).
